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