HOW THREE TOP CIOS Turn I.T. INTO “EMPOWERMENT OR­GA­NI­ZA­TIONS”

Forbes - - CONTENTS - BY JOE MULLICH

As com­pa­nies forge ahead into the dig­i­tal rev­o­lu­tion, trans­for­ma­tional CIOS are em­brac­ing new tools and tech­niques to en­cour­age col­lab­o­ra­tion among their em­ploy­ees and with their cus­tomers. This col­lab­o­ra­tion isn’t sim­ply about work­ing more ef­fi­ciently but reimag­in­ing cus­tomer ser­vice and busi­ness out­comes. In the process, they’re chang­ing the role that IT can play.

For The Home De­pot, this can mean co­or­di­nat­ing all the dif­fer­ent check­out op­tions used by its cus­tomers from home Diy­ers to pro­fes­sional builders with spe­cial de­liv­ery needs. For Toy­ota, it might mean col­lect­ing data for spe­cific driv­ers so they can get lower in­sur­ance rates based on their in­di­vid­ual habits be­hind the wheel. For Sch­nei­der Elec­tric, this means aug­ment­ing phys­i­cal prod­ucts with sub­scrip­tions that mon­i­tor the per­for­mance of those prod­ucts to pre­vent is­sues.

“Our pri­mary mis­sion is to em­power oth­ers — em­ploy­ees, part­ners and cus­tomers,” says Herve Coureil, CIO, Sch­nei­der Elec­tric, a global spe­cial­ist in en­ergy man­age­ment and au­to­ma­tion. “We want IT to be seen as an empowerment or­ga­ni­za­tion rather than hav­ing a mo­nop­oly over tech­nol­ogy.”

Re­or­ga­niz­ing For En­hanced Ef­fi­ciency

Trans­for­ma­tional CIOS are re­or­ga­niz­ing their de­part­ments around new ways of work­ing to en­cour­age more in­ter­ac­tion. Coureil, who be­came head of IT af­ter serv­ing as CFO of a Sch­nei­der busi­ness unit, came into a sit­u­a­tion where ev­ery coun­try the com­pany served had its own IT team. He im­me­di­ately formed Sch­nei­der Elec­tric’s first cen­tral­ized global IT func­tion. “We cre­ated global dis­ci­pline by shift­ing from a lot of lo­cal, small de­ci­sions into big­ger global re­source al­lo­ca­tion de­ci­sions,” he says.

En­sur­ing that the busi­ness side works in lock­step with IT is crit­i­cal to trans­for­ma­tional CIOS. Zack Hicks, who serves as both North Amer­i­can CIO for Toy­ota and CEO of Toy­ota Con­nected, a global com­pany that uses big data com­ing out of ve­hi­cles to pro­vide new prod­ucts and ser­vices, builds cross-depart­men­tal teams at the be­gin­ning of projects. “Man­u­fac­tur­ing and IT shouldn’t be able to imag­ine work­ing on some­thing new for the com­pany with­out be­ing next to each other,” Hicks says. “The level of en­gage­ment and col­lab­o­ra­tion should trans­form the re­la­tion­ship.”

In a time when busi­nesses are open 24 hours a day and re­sponse times to ful­fill or­ders have shrunk from days to hours, CIOS need to find ways to com­press and en­hance in­ter­ac­tions through­out the com­pany. “The feed­back loops are so much shorter,” ex­plains Matt Carey, CIO of The Home De­pot. “You have to get peo­ple in a room a lot faster. It’s less about hav­ing meet­ings than spend­ing more time to­gether.”

Still, much of to­day’s col­lab­o­ra­tion is done among peo­ple who are work­ing from planes, ho­tels and con­fer­ence rooms. Trans­for­ma­tional CIOS be­lieve that col­lab­o­ra­tion with­out im­ped­i­ment de­pends on hav­ing the right tools. These tools al­low peo­ple to eas­ily share

“We can make the lives of our em­ploy­ees bet­ter and make them more ef­fi­cient. We­can em­power their abil­ity to be ag­ile and ex­per­i­men­tal.” HERVE COUREIL, SCH­NEI­DER ELEC­TRIC

and find the in­for­ma­tion they need no mat­ter where they are.

At the same time, from a man­age­ment per­spec­tive, trans­for­ma­tional CIOS take the at­ti­tude that how you’re work­ing is as im­por­tant as what you’re work­ing on. “To­day, you can ac­cess doc­u­ments from your mo­bile phone fairly eas­ily, and com­mu­ni­cate over video very eas­ily,” Coureil says. “We can make the lives of our em­ploy­ees bet­ter and make them more ef­fi­cient. We can em­power their abil­ity to be ag­ile and ex­per­i­men­tal.”

Cloud Tech­nol­ogy Driv­ing Col­lab­o­ra­tion

Toy­ota, The Home De­pot and Sch­nei­der Elec­tric all use the cloud con­tent man­age­ment and file shar­ing ser­vice Box to en­able se­cure col­lab­o­ra­tion and in­dus­try com­pli­ance among their var­i­ous di­vi­sions.

Toy­ota has used Box’s cloud tech­nol­ogy to or­ga­nize in­for­ma­tion af­ter ex­ec­u­tives com­plained that too much was be­ing pushed to them via email. And be­cause the tech­nol­ogy can be used seam­lessly on tablets and smart­phones, “you can re­ally move to­ward a dif­fer­ent level of col­lab­o­ra­tion,” Hicks says. “Ev­ery­one is work­ing off the same in­for­ma­tion, as the in­for­ma­tion is emerg­ing.”

Carey ex­plains that us­ing the cloud has solved dif­fi­cult col­lab­o­ra­tion chal­lenges, like al­low­ing The Home De­pot’s mar­ket­ing depart­ment to share large video files with an ex­ter­nal ad­ver­tis­ing firm. “Box has be­come our way of choice to se­curely col­lab­o­rate with peo­ple out­side the com­pany, as well as inside the com­pany,” he says. “The key is that peo­ple can col­lab­o­rate in a nat­u­ral way.”

By pro­mot­ing new at­ti­tudes and adopt­ing new tools that make it eas­ier to se­curely share in­for­ma­tion and col­lab­o­rate, to­day’s trans­for­ma­tional CIOS are cre­at­ing nim­ble IT de­part­ments that are keep­ing up with the rapid pace of busi­ness and an­tic­i­pat­ing where it will go next. “Our CEO chal­lenged us to fo­cus on fewer, big­ger projects that make a big im­pact with cus­tomers,” Carey says. “And you can only do that if col­lab­o­ra­tion is built into how you work, so ev­ery­one has the same in­for­ma­tion and the same fo­cus of look­ing at things from the cus­tomer point of view.”

ment soft­ware com­pany to Or­a­cle in 2006, he still reg­u­larly works into the night. His new­est project is C3 IOT, the awk­ward name re­fer­ring to the In­ter­net of Things—the bil­lions of in­dus­trial sen­sors and other phys­i­cal de­vices now con­nected to the in­ter­net. In March, in­vestors (led by billionaire Jim Breyer) put more than $10 mil­lion into C3, valu­ing it at $1.4 bil­lion. Siebel thinks it will even­tu­ally be twice as big as his last score.

De­but­ing at No. 19 on the Forbes Cloud 100 list, C3 IOT op­er­ates in a fast-grow­ing sec­tor of the cloud that pro­vides soft­ware to the In­ter­net of Things. Re­search firm Gart­ner pre­dicts 2 bil­lion new de­vices world­wide will be con­nected to the in­ter­net this year—every­thing from street­lights to oil pumps— bring­ing the grand to­tal to some 8.4 bil­lion. These de­vices can eas­ily phone home when they are bro­ken or per­form­ing poorly. But more valu­able to their cor­po­rate own­ers, soft­ware pro­vided by com­pa­nies like C3 can read all those logs and do things like pre­dict that a de­vice is likely to break down in the near fu­ture, or warn that ma­li­cious hack­ers are prob­ing the se­cu­rity on a power plant’s re­ac­tors. “Cus­tomers are just fig­ur­ing it out right now,” says Al­fonso Velosa, an an­a­lyst at Gart­ner. “It’s a great place to be grow­ing.”

Founded eight months be­fore the ele­phant nearly took off Siebel’s foot, C3 was sup­posed to be an en­ergy com­pany. Flush from the sale of Siebel Sys­tems, Siebel had been con­tent to work on non­prof­its and spend time with fam­ily un­til some sym­posia he hosted on the en­ergy sec­tor got him in­ter­ested in build­ing soft­ware to man­age the flow of elec­tric­ity from plant to home more ef­fi­ciently. Pa­tri­cia House, a long­time col­lab­o­ra­tor, signed on as CEO, and the com­pany, then called C3 En­ergy, started work­ing with Cisco, Dow Chem­i­cal and Gen­eral Elec­tric. To fund the com­pany, Siebel emailed wealthy friends on a Fri­day, and he had $20 mil­lion in com­mit­ments, in­clud­ing $6 mil­lion of his own, by Sun­day af­ter­noon.

Siebel’s con­tri­bu­tions to C3 took a nose­dive af­ter his Au­gust 2009 run-in on sa­fari left him fight­ing for his abil­ity to walk. His weight down to 121 pounds, Siebel spent much of the next two years rolling into board meet­ings in an elec­tric wheel­chair. When he came back full-time, oil prices had stum­bled, crush­ing spend­ing for soft­ware at en­ergy com­pa­nies, and C3 was on course to go bank­rupt.

No one was buy­ing C3’s en­ergy soft­ware any­more, but Siebel saw a bright spot in the data flow­ing through the wind tur­bines and util­ity poles that made up the grid. By Septem­ber

2011, he’d de­cided to re­struc­ture C3. Af­ter the hol­i­days he laid off 110 of its 150 em­ploy­ees—ev­ery­one ex­cept engi­neers—in­clud­ing some life­long friends. Siebel says it was the hard­est mo­ment of his ca­reer. When he’d raised that money so quickly, “the un­der­stand­ing was the com­pany would be suc­cess­ful or I would die try­ing,” he says. “I couldn’t just sit back and watch this thing di­min­ish.”

Af­ter hun­ker­ing down for two years to re­build the com­pany’s core soft­ware, C3 re­turned to the mar­ket with a ser­vice that helps in­dus­trial cus­tomers in­gest the data com­ing from their de­vices by putting it into cus­tom ap­pli­ca­tions. It’s a mar­ket crowded with giants like GE and Mi­crosoft. While it’s im­pos­si­ble to ver­ify from the out­side, C3 claims it can build and de­ploy an app in as lit­tle as six weeks, ten times faster than and at a tenth of the cost of its com­peti­tors. One cus­tomer is Engie, a large French elec­tric util­ity that has built 28 cus­tom apps with C3’s soft­ware. One of them an­a­lyzed more than a bil­lion data points to fig­ure out why one Mid­dle Eastern power source was trail­ing an­other in per­for­mance by 2%. Us­ing ma­chine-learn­ing tech­niques to study the data, C3’s soft­ware dis­cov­ered that spe­cific main­te­nance events were caus­ing gas tur­bines to de­grade four times as fast. Fix­ing the prob­lem saved the com­pany more than $125 mil­lion a year.

Al­ready cash-flow pos­i­tive, C3 is on pace to about dou­ble its rev­enue this year to $100 mil­lion while tripling its book­ings. Big new cus­tomers in­clude Con Edi­son and Ori­gin En­ergy. And Siebel’s busi­ness isn’t limited to the In­ter­net of Things. C3 re­cently signed a deal with a large U.S. health care com­pany to ag­gre­gate and an­a­lyze its health records. The re­sult­ing data could help phar­ma­col­o­gists and ra­di­ol­o­gists pre­dict who is likely to con­tract spe­cific med­i­cal con­di­tions or dis­eases. In the race for cus­tomers, IOT com­pa­nies typ­i­cally choose a cou­ple key sec­tors (C3 nat­u­rally started with en­ergy) to fo­cus on and dif­fer­en­ti­ate them­selves, says Michele Pelino, an an­a­lyst at For­rester. Health care and aero­space are among C3’s next tar­gets.

An­a­lysts ex­pect mas­sive con­sol­i­da­tion in the in­dus­try over the next decade, and Ama­zon (cur­rently a part­ner) could prove to be more a ri­val than a friend. With staffing back up to 130 em­ploy­ees, C3 is com­pet­ing more than any­thing for tech­ni­cal ta­lent. “The com­pe­ti­tion is un­like any­thing I’ve ever seen,” says in­vestor Breyer, whose leg­endary ven­ture cap­i­tal ca­reer has spanned three decades.

So far, Siebel is liv­ing up to the prom­ise he made to his pow­er­ful friends. Says Breyer: “Tom has a chance to be a world­wide leader.” Again.

Matt Carey, CIO, The Home De­pot

Zack Hicks, CIO, Toy­ota Mo­tors North Amer­ica, and CEO, Toy­ota Con­nected

Herve Coureil, CIO, Sch­nei­der Elec­tric

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