CUT VERSION-Is Technology Still the Main Road to the Customer?

David G. Sherburne, Director of IT, Carestream Health
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David G. Sherburne, Director of IT, Carestream Health

IoT, M2M, Ubiquitous Connectivity, Nest, Uber, Cheap Sensors, Big Data, Smart Devices, all these terms and examples play every day in today’s media. Is this a classic hype cycle, or a once in a lifetime trend that will fundamentally change the way we interact with our customers? To bring home the impact on your next business trip, ask a taxi driver in Chicago and listen to them pontificate about Uber, a startup valued at $40B. Take a minute and read about GE's rapid growth in industrial services described perfectly in the November 2014 issue of the Harvard Business Review.

There is no doubt that over the next five years there will be a lot of connected devices and huge amounts of data flying around, but will it become useful and change the world? This is only the beginning of a much larger shift in consumption patterns that started years ago. Several mega trends are uniting to bring about a perfect storm that will place companies in a competitive fight for their very existence. Consumers will enjoy rapid change, efficiency and new opportunities in the new world. Unprepared incumbent players will succumb to new players that will out innovate them in the new service based economy and win their customers over. As technical leaders, we must prepare ourselves for these inevitable changes as these trends accelerate. Let’s explore the drivers for this acceleration and what has to be done to greet this change with open arms.

There are a multitude of technology and social mega trends that are setting the stage for accelerated change. Key technologies include ubiquitous connectivity of devices (IoT), low cost sensing (billions of sensors), unlimited cloud computing power, powerful mobile devices, data analytics, and the Internet as a utility. All of these are combining together to enable new business opportunities for companies that can pull the pieces together and deliver new services rapidly. Social Mega trends are mixing with this rapid rise in technology to accelerate this phenomenon. The attitudes of Millennial's and their mass social acceptance of connectivity, personal data sharing, becoming consumers, and the green movement are influencing their older counter parts to also join the evolution. Social acceptance coupled with technology is rapidly accelerating pace of change towards these new and different economic models faster than back in the old days of Napster.

How will existing businesses have to adapt their current internal structure to the "New Sharing Economy" and its increased demand for value added services? In order to help visualize the business transition the following model was developed to depict the evolution of the customer relationship to help explain this progression.

The IoT (Connectivity) is just the beginning change associated with the new economy. Companies will need to increasingly merge targeted machine data streams and analytical modeling when developing products and services. Leaders will have to rethink their existing processes and infrastructures to enable more frequent and rapid interactions with customers. The new consumer will value faster innovation cycles and ways to make them more efficient. "Hyper Innovation" cycles will require technology providers to deliver rapid changes to hardware, software and services. This new cadence will require coordination of technical functionality, value added services and new software simultaneously in order to meet demands caused by disruptive new market forces. New consumption and consulting market models will form and reform in a sector. Have you considered the full extent of the rapidly changing customer relationship and the opportunities it will bring?

  For the incumbent technology producer, technology alone might get you to the customer’s doorstep, but value based services will get you an invitation inside their home  

In order to be successful in the new world, CIOs will have to abandon the cost center approach to information technology if they haven't done that already. Executives will have to partner closely with their "C-Level" peers to drive the required business changes across the company. Functionally competing silos will never deliver the solutions required by the new economy, so new operational processes will have to be driven forward. This data enabled revolution fed by device information streams will require a level of cross functional alignment that is currently not present in many traditional companies. C-Level executives will have to lead the company towards harmonized business operations that fully address cross functional strategic planning, project management, information technology, product delivery, manufacturing and service. This will require existing teams to work together in ways that will feel unnatural, cause competition for funding, and shuffle delivery processes as organizations shift away from strictly technology development and move towards managing the creation of systems that deliver services. So dust off those books on leading change!

Discrete IT point solutions that typically manage information within functional silos like product development, software, service, marketing, sales and manufacturing will need to give way to an integrated eco-system that controls data across the multiple functions and quality baselines. Product Lifecycle Management (PLM), Application Lifecycle Management (ALM) as well as Service Relationship Management (SRM) systems will have to form an "Integrated Lifecycle Management" (ILM) eco-system that controls information from concept to release, and then extends that control to the customer. Supporting rapid updating will be necessary to evolve with the market. As models shift from ownership to consumption the service responsibility will shift from the consumer to the provider making this eco-system even more critical to a company’s success. The expectations from the new Millennial, green consumer will be able to share and use to depletion, rather than constantly buying something new. This will require more deliberate control of device configuration throughout a life cycle that includes the customer.

As a “C-Level executive" you will need to lead more than manage during this transition, and navigate the perfect storm that promises to being a tsunami of change to your business. The green culture, servitization of product, digital ubiquity, cloud computing, and mass social acceptance of connectivity will fundamentally shift the focus from competing on the best technology product, to delivering a product that will open the door to value added services. For the incumbent technology producer, technology alone might get you to the customer’s doorstep, but value based services will get you an invitation inside their home as a strategic partner. Sitting on the technology stoop of yesterday will reduce your once coveted technology offering into a simple commodity, and nimble start ups fueled by hyper innovation cycles will leverage your technology as the welcome mat to your former customer. So as a C suite executive, are you ready for the shift that looks to be bigger than the Internet? If you’re not, better fire up the lobbyists and slow down the rate of change. I envision an economic tide that raises all boats. I wish you all smooth sailing to the new world.

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