Collaboration, role of the CIO, data, connected objects : what are the big trends of digital transformation ? Frederic Charles, in charge of IT Strategy and governance at Lyonnaise des eaux is an historical pillar of IT Innovation in france, often noticed for his vision and disruptive approach. He accepted to answer to a couple of questions on digital transformation.
Bertrand Duperrin : Hello Frederic. Could you introduce yourself and tell us what your job is ?
FrÃ©dÃ©ric Charles :My job is information system management. As a matter of fact information systems need more and more managers, whom are not necesarily IT technicians like before. I don’t have an IT degree myself but one in the field of energy.
We need managers because we’ve moved beyond project management alone and have to manage project, teams, costs and align with the need of business lines and the corporate strategy. We can draw a parallel with logistics. What used to be logistics platforms have become logistic departments. Today we can say that the IT department has become the logistics of digital.
The IT department is the logistics of digital
The point is IT departments were not designed for this so there’s a real transformation issue, considering what IT departments have been designed at their beginning and where they should be headed today. Today, for IT profiles, the background matters less than the way we define the role of the information system. Yesterday’s records may not be significant tomorrow.
BD : Is your double orientation IT/business the reason why you were one of the first in France to push social collaboration initiatives ? (2008-2009)
FC : At the very beginning I had a technology issue and had to replace obsolete platforms. We started with the assumption that functionalities where not an end in themselves and wondered what goal we had to achieve. We easily found that the goal was to redefine the information and collaboration system. In 2008 I was in charge of the intranet and immediately started thinking about the next steps because communicating and sharing information were necessary but not sufficient regarding to the challenges of work.
BD :Â You’re among those who can stand back regarding to social collaboration and enterprise social networks. What’s your feedback today ?
FC : It worked when businesses allocated enough resources. Often because there was a charismatic leader, an urgency to rationalize and simplify. But it did not work for people who were still in their comfort zone. As long as businesses where in a zone of discomfort because they had no choice but to move forward it was possible to do things. That’s the opportunity we had at Lyonnaise des Eaux because in 2009-2010 we had to redefine our mission, our business lines, and move towards collaboration and stakeholders involvement. So we were fully aligned with the context of our company in an industry that was redefining itself, where everyone had to question some things.
Social collaboration did not work for businesses in their comfort zone
All those that were in a discomfort zone moved, did things and achieved an actual ROI. On the other hand it did not work for those who were still in a comfort zone and could say “there’s something going on but I’m not force to join, not forced to use it so I won’t use it” even if it meant renouncing to the benefits of collaboration and its value.
BD : I also have the impression that we struggled to move to “activity specific social collaboration”
FC : That’s right. Activity specific social collaboration is a Grail I expected to come much earlier. In fact I think that ERPs trapped processes in a rigid way and that “activity specific social collaboration” arrives in a zone of conflict with ERP. On the other hand it worked in some fields like HR because they were not very computerized, except for the payroll processing. They’ve been able to easily migrate to innovative approaches, for example in talent management with products like Talentsoft, in Saas, in the cloud, with social and collaborative approaches. The fields that got quickly revolutionized y social where those who escaped ERPs.
Innovative approaches were easier in field that were not rigidified by ERPs.
In these fields, process description was complicated because there were too many cases while humans could easily handle these exceptions. On the other hand, very little progress was made in more industrial fields.
My believe is that social must integrate and come back through systems. There are niches were it works today like in CRM with Saleforce for example, in HR, but there’s no example of social embedded into processes elsewhere. For instance it’s not happening in the procurement functions while it’s a truly collaborative one, from upstream to downstream, from defining the need to collaboration with subcontractors including the appraisal of these subcontractors. The lack of collaboration in procurement solutions remains a mystery to me.
BD : do you think that activity specific social collaboration will come from social networks of business applications ? Do business applications need to become more social or should social networks connect to business applications and become a collaboration hub, a new layer ?
FC : That’s the right question but we also consider the economic dimension. Behind business applications you have a vendor or an integrator that often thinks in terms of scope of usage, of new licences but seldom in terms of collaboration.
In small businesses there’s only one ERP. You can either add the social module of the ERP or connect with the soial network. It’s possible. In large businesses you have many ERPs and a logic of silos by business line, geography etc and that’s a matter of partition. When a vendor issues a collaboration module for its ERP he does not want his competitor, also present at the client’s, to sell his. Business have nearly nothing to say in this debate. The only thing they can do is to normalize something central but minimalistic because it won’t do much things since it has to do it everywhere.
Even if I don’t like the idea, we can say that email as a generalized platform has become the social layer that works everywhere. And there’s one and only one protocol ! If businesses manage to build a shared and more sophisticated protocol to make it become the global collaboration system, the only thing to do will be to connect it with the ERP. Today ERPs connect with email but we could connect them with something else.
BD : Some vendors are trying to push open standards like OAuth, Activity Streams etc, the W3C tries to ensure uniformity.
FC : It’s going to take time but that’s what’s needed.
BD : But when the W3C works on this matter you have Jive, Google, IBM, SAP around the table. That’s a true issue…
FC : Yes. With lots of versions and devices, Microsoft is not a standard by itself anymore but they know that. Moreover they adopted an open source standard for connected objects instead of pushing a proprietary one as they used to do.
BD : You mentioned connected objects. At the beginning the matter was enterprise 2.0, then social business, today it’s digital transformation. What difference do you make between these concepts ?
FC : I often think we’re talking about the same thing but with a new name. Let’s take an example.
When I’m working with a local community in the framework of a contract, am I collaboration, doing digital stuff… ? In this field we have long term contracts so the idea of sales quickly disappear in favour of execution. The only thing we do is working together and we have a portfolio of means to do so. There are many fields where digital and collaboration merge.
If employees don’t collaborate in the workplace, they won’t collaborate with clients
But there’s another very important point. In some cases we’ll open gates to the client through collaboration tools or connected objects but if employees aren’t not aware of what collaboration means it’s like putting them in a room with a phone without telling them there are customers at the other end of the line. If they don’t learn it internally they won’t do it externally.
BD : I also have the impression that we moved from making people to things together to including data and machines as new players in collaboration approaches. To some extent it’s like saying “if humans are complicated, let’s to it with machines“. If you add connected objects, digital is much broader than human to human collaboration.
FC : As a matter of fact, social was between humans and digital goes beyond. Speaking of connected objects, those that interest me are our client’s because they allow to engage in a digital relationship with the client though the object.
Objects will bring me data, we can share it and that’s where businesses get in the game. The first connected object is the smartphone. We always have it in our pocket. Then the other interesting objects are those tied to human because they’ll help to automate many things and bring information in our systems.
BD : We could already do the same before but people had to share the data themselves. Today, objects make us enter an age of passive collaboration.
FC : let’s look at foursquare. At the beginning there’s a form of collaboration : when I do a check-in I’m telling others I’m here. With a connected object you can imagine automatic check-ins. It’s not changing the basics but will help to generate more data, more easily.
Connected objects don’t change the basics but help to generate more data, more easily
In the end the goal is the same : meet with people, optimize movements, knowing who know whom and hat at a given moment.
It’s not going to be machine-to-machine. It’s like B2B2C, we’ll go through objects to talk with humans, to get closer to them. At least on a short term. In anything we see today, from watches to clothes, there’s always an human behind.
If Mrs Anybody as a connected object on her fridge to share information, what matters is not the fridge but Mrs Anybody. The object is only an intermediary. On the other hand it makes her life easier : she does not have to take her iPhone, install and launch an application. That’s what Evian did for water ordering, Darty [French “Best-Buy”] for its customer service…
The value of a connected object is the human behind
Behind the object there’s a service and people. That’s nothing more than one more interface as the smartphone brough an additional – and complementary – interface to the PC.
BD : Another field where digital thrives : customer relationship
FC :Â It’s the most advanced field because they have the ROI, the sales, the brand. So they got more means. It’s a field that’s also more advanced in terms of automation. It goes in the opposite direction to the rest and tries to remove humans every time it’s possible. If a robot is able to display the right ad regarding to my needs and tastes instead of an advertising network it does not make any problem.
On the CRM side there will be more and more things automated with robots, algorithms like on the stock market where most of the trading is not done by humans anymore.
CRM automation requires a skill leap from the marketing department
That’s where I think an actual skill leap will happen regarding to today’s marketing
BD : The return of the R in Customer Relationship ?
FC : First, customer relationship has never been integrated as such in marketing. Customers and marketing were managed in silos. Marketing was more communication and customer relationship more transactional. Today it’s obvious that both are merging.
Then there’s a change in terms of sophistication. Marketing departments used to be able to outsource a campaign to an agency, with a beginning and an end. Now the relationship will be continuous so the focus will be more about platforms. Businesses will only have two possibilities : either build their own platform to get in touch with their customers or outsource it. That’s why some agencies are buying IT assets to have such platforms. Facebook, Google or Criteo have such platforms supporting customer relationship and what they sell is the access to these platforms. Agencies will either switch business and simplify the access to the platforms like motorway companies that establish tools or build their own ones. Either you pay for the highway or you take a smaller road. In the second case you’ll have to build your own road.
It’s an infrastructure decision : should I join large platforms and with whom of should I build mine.
BD : There’s an issue with “highways”. If you go on Facebook you’ll have to share your data with them and except your logo you won’t be very differenciating.
FC : We already used to share our data before. We used to buy the use of databases we did not own. We did not own the customer until he bought or asked to be called back. So that did not change. But if you want to own all of this you must invest in the need means and the ticket is going to be more and more expensive.
Digital does not change anything to basics : what matters is to own and manage the customer relationship
So there’s nothing new. It’s only competitive advantages we’ve lost sight of. If you consider OCP in France [a pharmaceutical distribution company], their business is only to manage a privileged relationship with all pharmacies, to be the unavoidable intermediary between any supplier and the pharmacies. No matter if the product or the delivery means changes. It’s the same with the SEITA [tobacco distributor] who started distributing cigarettes to all tobacco shops and moved to other products : their business is still managing the relationship with tobacco shops.
So we’re back to the starting point anyone should understand in digital : digital is a new logistics system in the world of data.
In short we’re back to basic and invariant principles. With whom should I be in relation with and do I want to manage the relationship by myself or with others. It requires governance.
BD : So what do all these things mean for the IT department ? That’s a radical evolution !
FC :Â IT departments grew up step by step by computerizing all fields of the enterprise, one by one, since the 80s. At this time it was like buying tables and chairs : one choses the table and puts them in a room. Today weve tables and chairs everywhere, in all functional areas. There is nothing more to buy and the real issue is to make things work. Have an IT system that is more and more integrated with corporate processes, knowing that more an more processes are supported by the information system.
The IT Department is not here to manages standards anymore but to lead the digital transformation
So the IT department is not here to manage technology standards, manage projects or outsource but to lead the digital transformation of the organization. At the same time it has to deal with legacy systems that won’t disappear before 10 ans because that’s the life duration of any system. So if you have an IT master plan for the next 5 years you must know that you won’t replace more 50% of the existing technologies. So we have to wonder which technologies should be changed now and which later.
BD : You said that the IT department had to lead the digital transformation. Much is said about Chief Digital Officiers (CDOs) right now. What do you think about ? Who must or will take the digital leadership ? IT or marketing ?
FC : Both IT and marketing were created to respond to needs that have radically changed since then. Both have almost become anomalies in the org chart and we need to find a way to recompose everything. Organizations are trying different ways but there’s no real model so far.
In this context there’s something that should be considered very carefully : data. The only thing that flows in this logistics is data. IT departments never managed data analysis, which used to happen on the business side, and marketing departments had neglected data capitalization for years, contrary to Google or Facebook.
The real question that will help to recompose the landscape is knowing how we’ll manage data, which data will be managed internally, how, in a centralized (ERP) or collaborative way and which data will be automated, in link with customer relationship, connected objects, customer platforms and robots.
Who’s going to build these systems ? Companies with the help of IT and marketing. Who will manage them ? We’ll need a name in the end. Chief digital officer or something else.
BD : Do you make a difference between a Chief Digital Officer and a Chief Data Officer.
FC : Obviously. I see the Chief Digital Officer as the one who manages the digital means and all what relates to it : internal, external, human… Data is about a more regalian role that encompasses security, ethics (what to use or not, how, what data crossing should we prohibit).
The role of the Chief Data Officer will be more about governance, less about business and strategy.
The Chief Digital Officer manages the digital means, the Chief Data officer is in charge of governance
That’s what I see today but there’s no absolute rule.
For instance, at Lyonnaise des Eaux, once we’ve dealt with the collaboration side, we established an “architecture and digital relationship” skill center because architecture is key, data is at the heart of architecture and digital relationships make the platforms work. It’s a skill center designed to serve the business lines.
BD : To end, don’t you have the impression that we’ve reached a tipping point ? We started years ago with “it’s about people” and know it looks like “it’s about data”.
FC : I’d rather say that data are a corporate asset that has been overlooked for a long time and have not been properly managed. It’s more like a new awareness but it has a lot to do with collaboration : a good data management is another way to deal with collective intelligence. Except that this intelligence is about understanding the enterprise, the clients, the employees, how they behave, work, to make better offers, make better decisions, be more proactive.
A good data management is another way to deal with collective intelligence
We’re not far from objectifying collective knowledge through data. Since the amount of data is going to expose and the human’s capabilities to analyse it will be more and more limited, we’ll need more data analysis systems to make automatic decisions.
Data are a basic asset that was under-utilized because no one used to see the value. Today we can enrich, automate it and it’s becoming a first call asset and this collective intelligence will help us to make better decisions.
What is meaningful enough to make us change our behaviors ? It’s to know something. That’s what we expect from data : brings things to our attention to make us change, improve. No matter it comes from a friend or a robot, the result is the same. What matters is to know we can do something.
BD : This is a very sensible debate today. With all these smart machines, robots, many fear that many jobs will be destroyed and not replaced by new ones. Your opinion ?
FC : I mostly focus on the IT industry, that’s to day those who make the robots. First we should be suspicious about “wrongly good ideas”. From the early 70s we’ve always said that computing is going to make paper disappear and we’re still very far from that. In the same way, in the domains we’re talking about, we will still need humans but maybe less in volume and more on specific skills.
As collaboration is questioning middle managers, robots question tasks that are easy to automate with a limited scope of decision. These ones will be easy to replace by intelligent systems. It’s possible to do that today and even more tomorrow. Retrainings will be needed.
On the other hand there’s an interesting migration to observe in the IT industry. When the functionality was available I used to watch on linkedin where employees of a given company where coming from and where they were leaving to. It used to make it easy to see big trends with massive moves of populations. So we saw moves from hardware vendors to infrastructure vendors. There’s a kind of self-reconfiguration of the industry with a shift to upstream, consulting, system integration and platform jobs.
At a worldwide scale it’s difficult to know if it’s going to create of destroy jobs. Geographies also matter : there are lots of task we could have automated but that were offshored in India for instance.
The good news is that we now have a kind of organizational fluidity as we can see with Amazon’s mechanical Turks for task distribution or the collaboration systems we mentioned earlier. It makes it easier for businesses to find people with the right skills and for people with the right skills to find the companies that need them. That’s why scares people today but it can coexist with the idea of keeping a certain volume of jobs.
Anyway the goal of the society has always been employment event if it meant useless jobs. On the other hand we must take globalization into account and France is not that good at creating the platforms that will distribute jobs and information tomorrow.