Finding new ways to deepen fans' emotional engagement with the sports franchise has become a prime directive for teams. For this reason analytics, data, mobility, and network infrastructure are central to modern professional sports. 

Over last few months, I have met with senior marketing and technology folks from teams such as the Boston Celtics, New England Patriots, Boston Red Sox, Boston Bruins, Oklahoma City Thunder, New York Yankees, and the German National Football Association. For all these organizations, the common thread is using technology to deepen relationship with fans.

During an appearance on CxOTalk, Fred Kirsch, Chief Digital Officer for the New England Patriots football team, and CIO Magazine staff writer, Lauren Brousell, described the Patriots almost fanatical commitment to fan relationships.

Since data collection and analysis are fundamental to engaging fans in the stadium, wireless infrastructure has become a priority for many teams, including the Patriots. The right infrastructure enables fans to connect easily on mobile devices, providing a foundation for team to use data and improve quality of life in the stadium.

Mobile apps provide information to fans while helping the team gather data, such as the type of content fans prefer, to fine-tune the stadium experience. Fred explained that fans bring their devices to the stadium and expect mobile, in-stadium experiences to complement the live action, pushing the team to find new ways of delivering unique mobile content during games.  

The following short clip shows highlights of the conversation with Fred and Lauren (you can see the entire show here): 

In the video clip above, Fred says, "Fans are our stakeholders and we are always looking to give them more value"; it is a customer-centric philosophy permeates the Patriot's design goals for interacting with fans. He continues with a statement about data and analytics: "Finding out what people want is easier when you find out what they do." 

Ultimately, every team wants to nurture an ongoing relationship, or daily conversation, that helps bridge the gap between fan and team. 

Also read:

CIO lessons from the Boston Celtics

Oklahoma City Thunder Uses Microsoft Dynamics CRM to Score with Season Ticket Holders

NFL Is Improving The Fan Experience, And The Patriots Are Leading The Way

Leadership Advice From An NBA Legend: Be A T.E.A.M. Player

Enterprise startup lessons from Muhammad Ali

Professional sports innovation: Patriots, Celtics, Red Sox, and Bruins

==========

CxOTalk is a video series that explores the relationship between technology and marketing in the enterprise. Each week, co-host Vala Afshar and I bring together innovative leaders and senior executives to discuss these issues in an informal, yet substantive conversation. Thank you to my colleague, Lisbeth Shaw, for helping develop this post and the summary video.

As Twitter well knows, user testimonials occupy a significant role in enterprise marketing. For technology vendors, genuine quotes from real buyers convert abstract, conceptual sales pitches into meaningful statements of product importance and relevance.

Testimonials give a vendor credibility, while encouraging potential buyers and industry analysts to pay attention. For this reason, enterprise vendors spend substantial time and effort cultivating their customers to provide references. Large companies such as SAP, Microsoft, and Oracle, for example, have teams of people dedicated to this task.

These so-called reference teams pay special attention to finding legitimate customers who will tell their story. It is hard to imagine a vendor completely fabricating a story: aside from being dishonest and breaking the bonds of trust, it's just too easy to be caught, a fact that Twitter has discovered.

Of course, fabricating a tweet is not the same as offering a detailed customer reference, but Twitter was founded on principles of transparency and honesty, which Wired calls an "unwritten rule of authenticity."

Given the importance of customer references, I asked prominent members of the enterprise community for their views.

Lora Kratchounova, Principal at public relations firm Scratch Marketing + Media, notes the importance of trust in any relationship with customers:

Marketing today is about trust. Customers trust that you will deliver today and tomorrow. Fabrications break the bond of trust; when you have to fake it, something is wrong. This was probably someone's dumb mistake, but it changes our perception of Twitter as a trustworthy company.

Steve Mann, Chief Marketing Officer at legal information supplier LexisNexis, echoes the notion of authenticity and trust between brands and consumers:

I find extremely ironic that Twitter, one of the engines behind the social media revolution, violated a principle they helped establish, that of authenticity and trust between brands and its consumers. When consumers fail to have authentic interactions with brands, they lose trust in those brands. Once trust is broken, consumers tend to go elsewhere.

Brian sommer, President of analyst firm TechVentive, explains the importance of genuine customer references to industry analysts:

User references are second only to an analyst’s own channel checks for understanding what a tech product actually does, doesn’t do, or do well. Moreover, these references put a customer’s face to the interaction they personally had with the vendor. References that have been bought, fabricated, or manipulated to offer less than the full truth of the customer’s experience aren’t worth the paper they’re written on.

Christian Gheorghe, founder and CEO of enterprise analytics and performance management vendor, Tidemark, explains that the companies must earn customers' trust:

Trust is no long vendor-driven; today, it is grassroots and customer-driven. The vendor must earn that trust through transparency, creating value, and allowing the customer's voice to drive the vendor's activities and product. The customer's voice goes through everything our company does. 

Jarret Pazahanick, SAP Mentor and Managing Partner of HR technology consulting firm EIC Experts, offers advice to enterprise buyers seeking references:

Every customer asks for references — they want to know that other customers use the product and are happy with it. If a vendor has no references, that's a red flag. Potential buyers should get vendor references and then ask to speak off the record with those users.

Eric Kimberling, Managing Partner at independent ERP consulting firm Panorama Consulting Solutions, agrees that honest references are critical to buyers of enterprise software: 

There is no substitute for hearing about the real-life experiences from actual companies that have implemented the enterprise software you may be considering. Underneath all the vendor sales and marketing flash is the reality of what past enterprise software buyers have experienced, so it is important to take the time to conduct due diligence with real-life customers.

The value of references to enterprise buyers is clear. Imagine the fallout if a large enterprise vendor fabricated fake tweets in a blog post; the situation would quickly rise to the level of crisis. For some reason, Twitter has gotten off lightly and I'm not sure why.

To those vendors who work daily to cultivate honest customer references, I applaud your tenacity and encourage your continued good work.

=====

On a lighter note, the Fake Tweeter Builder lets you fabricate tweets with an authentic look. Here's an example:

Here is a segment from our longer conversation:

In the past, marketers generally maintained a clear distinction between approaches used when selling business-to-business (B2B) versus business-to-consumer (B2C) products. Although this distinction made sense in a world dominated by highly centralized and monolithic procurement power, modern purchasing influence tends to be distributed more broadly through the customer's organization. For this reason, enterprise software vendors, a classic B2B business, are rethinking how they talk to prospects and potential buyers and embracing marketing techniques once reserved for the consumer world.

Click here to view entire video conversation with SAP's Jonathan Becher

The ability of individuals to broadcast their views, often to large or important audience segments using social media and web-based forums, has redistributed purchasing influence to create a new class of influencers. These influencers include prospects, existing customers, partners, analysts, bloggers, journalists, and others who may affect the outcome of a lengthy and complicated sales process. Because these influencers can shape a potential buyer's decision to purchase expensive enterprise products, business-to-business vendors like SAP have developed large-scale influencer programs to engage those relationships at an individual level. As Jonathan says, "Increasingly, we all know it's not the big glass building buying software, but it's people."

Although influencer marketing has become critical, the quest to amplify marketing messages on social media can generate tremendous activity that masquerades as useful interaction. For example, when employees respond repeatedly to one another's tweets, they may create a "conversation bubble" involving only themselves. This echo chamber provides little value, consumes participants' time, and can crowd out real communication with prospects and customers. As Becher notes in the video, the echo chamber is creates a "vicious cycle that's not amplification, just people talking to each other."

Five tips for successful influencer marketing

Influence is one of the most important — and misunderstood — concepts in marketing today consider these points when planning your strategy:

1. Popularity without influence is a fool's game. We all want page views, attendees, and other numbers that demonstrate people are listening. However, popularity is not a good indicator that someone will make an impact on your particular marketing goals. Meaningful influence is always function of your particular business goals; the definition of influence will be different for every company. 

Because measuring real influence is hard, many companies use tools such as Klout that present a simple influence score. Although these tools are convenient, they do not really measure influence, but instead report popularity on social media; for this reason, they add noise and confusion while providing little value to the serious study of influence. 

2. Relationship is the mother of influence. The best way to magnetize both customers and market influencers is to engage thoughtfully and substantively over time. Genuine relationships require ongoing contact based on shared interests and mutual benefit. It's that simple.

3. Link influencer programs to business goals. When determining which influencers to target, start with your own business goals. Do not even think about reaching out to influencers until you define clear goals with measurable outcomes. As an example, many companies want influencer marketing activities to affect sales-related business goals, such finding leads or accelerating the sales process.  

4. Measure, measure, measure. Measurement is the lifeblood of success with digital influence programs and campaigns. Measurement is the next step after identifying your business goals, selecting the right influencers, and starting a campaign. The right metrics will guide your efforts to meet those business goals and help shape marketing activities to achieve useful 

In SAP's case, for example, Jonathan describes an "influencer score" the company creates for speakers at SapphireNow, its large annual user conference. By correlating conference speakers and sessions against its sales pipeline, SAP can measure the ability of particular speakers and topics to influence that pipeline. These metrics also become an important tool when SAP constructs conference agendas in the future.

5. Tenacity creates results. Influencer marketing is a long-term strategy and not a quick fix for short-term sales problems. Success comes from developing a plan, using metrics and results to learn and adapt, and cultivating relationships over time. As with all relationships, the benefits tend to emerge gradually rather than as a single, apocalyptic flash of light.

Also read:

Expert panel: Transform business with social enterprise

==========

CxOTalk is a video series that explores the relationship between technology and marketing in the enterprise. Each week, co-host Vala Afshar and I bring together innovative leaders and senior executives to discuss these issues in an informal, yet substantive conversation.

Regarding my credentials to engage in this camera debate, my photos have appeared in the press, magazines, websites and other venues online, and in print; also, various columnists here on ZDNet have used my photos with their posts. And, for full disclosure, I regularly use a Nikon DSLR, a Fuji mirrorless camera, and sometimes even the camera in my smartphone.

My debate position is clear: I don’t believe that smartphone cameras are good enough to stop people from buying “real” cameras such as DSLRs, which is a position that research supports. For example, research reported in BusinessWeek shows the DSLR market is growing, even though smartphones have caused sales of point and shoot cameras to decline. In addition, data compiled by the Camera & Imaging Products Association, a trade group for manufacturers, demonstrates the growth in cameras that can take an interchangeable lens, which consists primarily of DSLRs. This graph tells the story:

Although the DSLR market remains vibrant, we must acknowledge that smartphone cameras offer two advantages: if you already carry a phone, the built-in camera adds no extra weight and it is always at hand. Given the size and weight of DSLRs and lenses, those are big convenience factors.

Nonetheless, today’s smartphones cannot approach the quality of a DSLR and decent lens. For example, there is simply no way a smartphone could take this photo:

Aside from image clarity and sharpness, notice that distance in the photo seems compressed. The cross streets look like they are close together, especially in the distance, because I used a telephoto lens to create this optical effect. Try that with the phone in your camera! Actually, don't bother because it will not work. The camera geeks may be interested that I took this photo with a Nikon D800 DSLR camera and 400mm lens.

Here is another example of a real camera, meaning a DSLR, in action:

The dog's face is in sharp focus, while the back of his head and the background are completely blurred out, emphasizing only the important part of this image. Again, a mobile phone cannot take this kind of photo. I switched to an 85mm 1.4 portrait lens for this one.

In summary, smartphone cameras are ideal for casual snapshots and pictures of friends as you walk around. However, serious photography requires greater camera horsepower than even the best smartphone.

The entire enterprise software industry faces pressure from users who want to consume software without significant implementation expense. Although tempting to view the cloud as the primary driver behind the rise of rapid implementations, in reality, the roots (at least for ERP) go back to the mid-nineties when SAP released its toolkit (which, incidentally, I helped create).

Fast forward 15 years to today, most software vendors offer a well-developed consulting methodology and a rapid implementation program of some kind. For example, Oracle offers a program called Rapid Deployment solutions. [Disclosure: SAP is a client.]

Each vendor's approach to rapid implementation may emphasize certain features, such as strong vertical market focus or automated configuration; however, they all address similar customer concerns over the high cost, time and disruption associated with enterprise software deployments. 

Defining implementation success

Although it is common to evaluate implementation projects based on meeting time and budget targets, genuine success requires specifying, and then achieving, specific goals and outcomes. For this reason, the best approaches to implementation drive early consensus and collaboration between IT staff and the business users responsible for the functions or processes the new software will touch. 

In general, projects that IT originates tend to be weaker than those in which the business is engaged. In other words, close collaboration between IT and business users is a hallmark of successful IT projects; software vendors and consulting companies must bear substantive responsibility for helping their customers ensure this engagement. Although ultimate responsibility for IT / business collaboration lies with the enterprise customer, the vendors can, and should, help ensure meaningful participation by both groups.

Exploring business objectives 

During interviews with customers of SAP Rapid Deployment solutions over the last few years, I explored how IT can work with lines of business to define concrete implementation objectives. Although always important, this step is particularly critical on rapid implementations, because shorter timeframes and lower budgets mean there is less tolerance for overruns due to poor planning. These underlying issues and relationships are independent of any particular software vendor or product and should concern almost all enterprise customers.

Given the critical role of defining business outcomes for technology initiatives, I recently asked three Rapid Deployment solutions customers about this aspect of their projects.

OraSure. Based in Pennsylvania, OraSure Technologies is a medical device manufacturer that develops a variety of diagnostic tests for the healthcare industry. The company brought to market the first in-home HIV test available to consumers. Orasure's revenues are approximately $90 million and the company employs over 300 people, including 50 sales professionals.

Historically, OraSure managed its sales pipeline by tracking and combining data using Excel spreadsheets linked together with time-consuming manual processes. Each sales person maintained a spreadsheet containing their own customer interactions; on a weekly basis, a sales director manually consolidated these individual reports to create an overall, company-wide view of the sales pipeline. The company's Manager of SAP Systems, Scott Baker, describes this manual consolidation as an "error-prone" and slow process.

OraSure's project goals therefore included:

• Eliminating manual consolidation of sales data
• Using mobility solutions so sales people could easily, and efficiently, enter sales data throughout the day as they visited customers and prospects
• Creating a real-time, overall view of the entire company's sales pipeline, reflecting accurate and timely data on sales interactions with customers

Kennametal. With revenue of $3 billion and 13,000 employees, Kennametal develops and sells a variety of industrial products and components.

Although Kennametal has been an SAP customer for almost 20 years, users still had difficulty extracting data to create financial models in areas such as pricing and quoting. According to Tom McKee, Director of Global Information Technology, creating these models required business analysts to maintain numerous spreadsheets, outside the SAP system, so they could manipulate the data as required. These "Excel jockeys," as he calls, them, manually pulled data from SAP to construct the elaborate models required to quote and price Kennametal's products.

These manual process had two primary drawbacks: slow speed and the risk of inaccurate data. For example, the pricing team would need three to four months to model the impact of changes in raw material prices, during which time "the world can change,” as McKee explained. In addition, after extracting this spreadsheet data from the source SAP system, the company lost confidence in its ability to maintain a "single view of the truth."

To address these issues, Kennametal deployed SAP HANA with four project goals:

• Dramatically reducing the time required to create pricing models
• Increasing responsiveness to customers by enabling the company to produce fast, customized quotes during the sales process
• Preventing "order stall" by more aggressively managing the order and sales process
• Improving inventory management

Deutscher Fussball-Bund. The DFB is Germany's national football association and, with 6.8 million members, claims to be the largest sports association in the world. The organization employs about 220 people, maintaining a headquarters and over 20 branch offices throughout Germany. To understand the relationship between DFB's business and technology requirements, I spoke with Daniel Gutermith, Program Manager responsible for implementing the organization's new integrated sports solution, and Ralph Dietz, who is the association's IT coordinator.

Although a significant part of DFB's business is selling tickets to football matches, the organization's financial and ticketing systems were disconnected silos that could not exchange data. As a result, the association did not have transparency across multiple internal departments, forcing employees to compensate with inefficient manual processes. Because the customer database was also a disconnected silo, DFB was unable to gain a complete view of customer activity or segment its customer base to create targeted marketing campaigns.

To address these shortcomings, DFB implemented CRM and is deploying SAP's HANA Enterprise Cloud with a ticketing solution from SAP. The key business objectives for this set of initiatives included:

• Linking sales (ticketing) systems with the finance department
• Creating a single repository of customer data to improve communication with customers, running segmented marketing campaigns and providing better customer service
• Rapidly delivering small parts of the project, within target time and budget goals, and then iterating

Collaboration is the key

Achieving implementation success always requires close cooperation between IT and people from the specific business areas that the software will touch. This requirement is particularly acute with rapid implementations, because schedules are compressed and there is a lower tolerance for budget overruns. 

When project failures occur, managers may blame the technology — "Did bugs cause the problem?", "Does the software not work?", "Did our vendor fail?" However, my experience studying projects over the course of many years leads to an inescapable conclusion: success absolutely depends on combining business expertise and core technical skills. Business projects with weak technical skills are like an Olympic runner with broken legs: the race is a nonstarter. Similarly, brilliant project technologists without clear business goals may spin their wheels and accomplish little of real value. Success demands that both sides work together.

Shifting from a large implementation mindset to deploying incremental pieces in stages over time requires software vendors, consulting firms, IT departments and business stakeholders to modify their expectations. The transition has implications for enterprise software in areas such as economics, management, staffing and technology. As is always the case, innovation and new approaches require new thinking.

Although this change may be difficult for some vendors and customers to manage, the era of large, monolithic and expensive implementations is over.

Inside the mind of an enterprise software development organization

In the first part of this double header, Holger examines market dynamics that pose a challenge to enterprise software vendors. In this continuation, he offers suggestions for influencing your vendor’s future products and direction.

==========

How to influence the enterprise software chess game

Always remember that information is power – understanding your vendor will help you gain maximum value and benefit from relationships that sometimes appear like a chess match.

The broken customer feedback process

Most enterprise vendors struggle to find workable and fair approaches for incorporating customer input into future releases. For the vendor, the challenge lies in deciding how to prioritize requests among the hundreds or thousands of customers they may have. Although focus group testing and independent customer advocacy groups are vital, the prioritizing process quickly becomes unwieldy with a very large customer community.

Facing this challenge, the vendor’s product strategy team may emphasize so-called “table stakes” and develop only those features that maintain parity with competitors or meet pre-existing, short-term commitments. Vendors that ignore customer input in this way render the feedback process dysfunctional.

Existing contracts and commitments can create formidable challenges for any development organization, particularly when marketing and sales makes promises to customers without first consulting development. When this happens, as it often does, the development group may not possess sufficient capacity or technical capability to deliver within promised timeframes. Relationship between the vendor’s product and sales leadership often determines the extent to which sales people make unrealistic promises to customers without first consulting the development team.

A sales-oriented vendor, especially one desperate to close a quarter, may make concessions that reduce sales pressure in the short term but create a Scylla and Charybdis situation for the development organization. When this happens, the company may re-align development and sales priorities to hit revenue targets, even at the cost of sacrificing committed roadmap items and jeopardizing relationships with existing customers. The vendor’s CEO plays an important role in deciding how to address these competing goals and objectives.

It is worthwhile pointing out that Workday is an exception to this particular set of revenue games, and does a very good job at collecting and prioritizing customer requirements. In fairness to larger vendors, however, Workday’s customer base is still relatively small, making it easier to balance revenue with customer satisfaction. It will be interesting to watch how Workday manages tensions between short-term revenue and long-term customer satisfaction as the company grows. Virtually all other vendors have failed to sustain a highly collaborative product design process, based on dialog with customers, over the long-term.

Customer impact

Of course, you will be concerned and upset if changing priorities cause the vendor to delay critical functionality they promised you. Your anger may be even stronger if you based the purchase on specific vendor commitments and timeframes to deliver functionality your company needs.

No matter how justified your anger, the vendor’s financial health depends on meeting its own internal revenue and profitability targets. Vendors that miss these goals may need to cut costs across the entire company, including areas such as development and support. When a vendor reduces costs to maintain margins or combat slowing sales, the negative impact on customers can be substantial, especially if product development slows or service goes downhill. For all these reasons, vendors have great incentive to close new deals, despite potential risks, and deal with unintended consequences later.

An experienced development leader always maintains spare capacity to handle unplanned demand for product development. However, if the vendor signs several mega-deals at the end of a quarter, development may need to re-purpose that excess capacity, which can exhaust spare resources and have a negative impact on product development activities. Understanding this underlying conflict can help you recognize forces that may derail a vendor’s timeline for delivering new functionality.

What not to do

As we discussed in part one, it is always best to remain part of the vendor’s core (or “mainstream”) functionality. When evaluating enterprise software, try to find a product with a close fit between these mainstream functions and your business needs. If you must request special features from the vendor, gain assurance they will develop this out-of-mainstream functionality within a definite time period. However, if the vendor does not follow through with these special features, as promised, your risk of a failed implementation may increase.

If your company has non-standard process requirements, consider the possibility that your way of doing business may be inefficient. Although your enterprise may possess uniquely innovative processes, most likely the need for non-standard software indicates processes that are inefficient, ad hoc, or incomplete. Therefore, before demanding custom development, ask the vendor to validate whether your ideas make sense; even then, be sure they agree to incorporate your distinct process needs into their mainstream functionality within a specific time.

Some companies do have processes that are genuinely unique and central to maintaining competitive advantage; in these cases, it may be best to avoid a standard enterprise vendor and build custom software tailored to your particular needs.

In general, do not push any vendor to accept unrealistic expectations, which they cannot fulfill, as a condition for closing a sale. Pushing vendors beyond what is realistic, and feasible to deliver, will almost certainly backfire for both of you.

What you should do

As a customer executive, there are important steps you can take to influence a vendor.

To start, reach out to peers and coordinate their requirements with your own; importantly, work with other customers to prioritize your collective roadmap requirements. When multiple customers make a common request for software functionality, the vendor is more likely to prioritize the features and deliver quickly. In addition, if you become an informal leader among their customers, the vendor will appreciate you even more, which is always helpful.

Similarly, avoid missing opportunities to serve as a reference for your vendor. Be an honest reference, but do help the vendor attract more customers. Helping the vendor as a customer reference is one of the best ways to bring your requirements more attention. If you have ever wondered why companies such as Proctor & Gamble, as an example, serve as a public reference for SAP over the course of 20 years – well, now you know.

Developing realistic expectations of what your vendor can reasonably accomplish is also a necessary survival skill. The software industry creates substantial hype, especially at user conferences and trade shows. It’s okay to be excited and party with vendors and influencers, but discount what you hear at these events by fifty percent. Then, make sure the remaining fifty percent consists of functionality that will actually benefit your organization; just because a vendor offers new products and features does not mean they will be useful to you.

Concluding thoughts

The art of dealing with an enterprise vendor comes from being fair, firm, and patient. Be fair when asking the vendor to do something; be firm expecting that develop will be done on time with the right functionality; and be patient by understanding the constraints and dynamics underlying your vendor’s decisions.

==========

Thank you to Holger Mueller for writing this guest post.

Also read:

• The IT failures blame game (part 1)
• The IT failures blame game (part 2)
• The IT failures greed / blame cycle
• Exploring the Devil's Triangle
• Enterprise software and the curse of vendor sameness
• Trusted enterprise software experts: The #EnSW Twitter list
• Change management and communications for IT success
• Intel CIO presents the path to #Rockstar IT
• Cloud research exposes gaps between CIOs and business leaders

Recently, I came upon the writing of analyst, Holger Mueller, and was impressed by his depth of knowledge and experience in enterprise software. For that reason, I invited him to write a guest post for this blog. Well, Holger took this to heart and wrote enough material for two pieces, of which this is the first.

Holger's topic is important because software companies, by nature, are technology creatures. By understanding the dynamics underlying a vendor's software development efforts, you will be more successful negotiating, buying, and implementing their products.

Holger Mueller is Vice President and Principal Analyst at Constellation Research, covering topics such as cloud, IaaS, PaaS, Analytics, and SaaS. Mueller provides strategy and counsel to key Constellation Research clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, investment analysts, venture capitalists, sell side firms and technology buyers.

==========

Inside the mind of an enterprise software development organization

For some time, I have wanted to explain the inner workings of an enterprise software vendor’s development organization. In my experience, customers usually respect their vendor’s development group, but may not fully understand how a development organization really works. In this guest post, I will explain important aspects of software development inside an enterprise vendor and, far more importantly, offer tips on turning that understanding to your advantage.

Importance of business “fit”

From a technical perspective, enterprise software is often easier to build than consumer products. In contrast, success for an enterprise vendor depends on understanding their customers’ business processes and practices sufficiently well to make the software simple and user friendly. As a practical matter, however, enterprise vendors cannot support every possible business process, forcing software providers to decide which processes are most critical and relevant to their market. Choosing which processes to support, or not, is a crucial decision for every enterprise vendor (and their customers).

Every enterprise software customer should understand this key point, to understand how their needs map to the vendor’s core product focus and design plans. Although configuration or custom development can address some process shortcomings, these solutions are not optimal. Configuration is only possible when the vendor pre-built the choices beforehand, while modifying the vendor’s code with custom programming virtually always drives significantly higher cost of ownership.

To avoid these problems, try to purchase software that closely matches your business processes; if in doubt, verify that your specific business processes are in the product and will continue to receive ongoing development. Ensuring a good fit between your business needs and the product’s features is an essential step when evaluating enterprise software.

Architecture and platform

It is easy to trivialize the complexity of building enterprise products because the software itself tends to be relatively straightforward to write. However, this apparent simplicity masks the complex underlying architecture on which most enterprise software runs; developing and maintaining an enterprise platform is difficult to get right, especially when the technology starts to age and the vendor must reinvent its platform to avoid becoming obsolete.

As a buyer, don’t worry too much about architecture, except to be aware of the important role it plays in enterprise software development. However, be sure to select a vendor that can demonstrate sufficient clients and references to prove their architecture is robust and works as needed.

If your vendor has a limited client base, pay particular attention to ensure their architecture will be scalable and reliable in your environment. In addition, if your vendor makes a significant platform change, reevaluate their products before buying into the new architecture. Right now, three of the top enterprise software companies are undergoing platform transitions: SAP (HANA), Oracle (Fusion), and Infor (Ion).

The enterprise architecture life cycle is ironic because just when your vendor sees greatest adoption, their architecture is probably getting old and may need to be refreshed. It can take years for internal product teams to build applications on a new architecture and for customers to buy and use these products. Therefore, vendors are understandably reluctant to rewrite their architectural foundation unless necessary for technical or business reasons (such as competitive pressures). Nonetheless, most enterprise vendors do undertake periodic architectural refreshes; according to this measure, architectural warning bells may be ringing for popular vendors such as Salesforce and Workday.

The maintenance question

Enterprise software support and maintenance has a bad reputation, because vendors frequently fail to make the value proposition tangible; in addition, vendors sometimes do a poor job maintaining their own software, which makes matters worse. Combined with high cost, which can be 22 percent of the license list price, these factors can create unhappy customers for software maintenance. As a result, third-party suppliers of maintenance, such as Rimini Street, are growing increasingly popular. Despite poor public relations, maintenance is a key success factor in enterprise software because every vendor must address and fix defects.

All software suppliers must find and fix issues in their latest code, but on-premise vendors must repeat this process in all iterations of maintained releases. For each product release, the vendor must locate the issue, create and test a fix, and finally ship it to customers. Companies such as SAP and Oracle may support up to seven earlier releases, making maintenance a daunting challenge; you can imagine it’s no fun to repeat this find, fix, and test drill seven times! Despite the challenge, maintenance is essential to the vendor’s success; moreover, you deserve to receive high quality fixes in a timely manner since you pay for them.

Changes in statutory requirements over time make maintenance more difficult, because they can force software companies to update their applications continually. In addition, these regulatory changes may require on-premise vendors to update old releases dating back many years.

Although vendors may actively fix known defects in current software versions, be aware they may be less diligent finding and fixing problems in older software. For this reason, try to avoid remaining on “orphan” software that the vendor does not actively maintain. As a simple rule of thumb, as long as more than a 1000 customers are on the same version, you are probably safe.

Does SaaS make it easier?

True software as a service (SaaS) vendors promise that all their customers are on the most recent software version. Given the challenges of maintenance described above, it is clear that SaaS is highly beneficial to the vendors. With SaaS, vendors only need to maintain one set of production code, which reduces complexity and lowers their costs by avoiding the messy on-premise problems described earlier. By continually upgrading their entire client base to the latest version, SaaS vendors eliminate the need to maintain multiple configurations and older releases.

Today, SaaS is just growing out of its infancy. As these vendors mature, they are likely to face co-existence challenges between new platforms they develop and old ones that customers continue to use. Other growing pains include significant discussion among SaaS customers about the pros and cons of user interface changes that occur when the SaaS vendor releases a new version. Although many SaaS vendors “turn off” new features by default, customer training is an issue shared by both on-premise and SaaS vendors. Because the SaaS industry is relatively new, vendors have avoided many configuration and release complexities faced by on-premise developers, but the future may not be this easy.

SaaS customers should request their vendors for long transition timeframes when significant changes occur in either functionality or architecture. In some cases, vendors will offer customers an upgrade window extending up to nine months after releasing the change. However, be aware that demanding this flexibility may negatively affect your vendor’s ability to develop functionality and maintain software quality.

Final thoughts

Understanding the mind of enterprise software development can help you gain most value from your investment while minimizing cost, time, and hassle. Therefore, be sure to consider these four points of advice:

• Be sure there is good fit between the software and your business process requirements
• Understand the dynamics behind software maintenance
• Stay on current releases with other customers to ensure the vendor actively maintains your software version
• SaaS customers should ask their vendors for plenty of time to transition users following significant product releases

==========

Thank you to Holger Mueller for writing this guest post.

A

For IT projects, communication challenges arise because new technology forces organizations to change their processes and job functions. Especially on broad projects such as ERP, process change is a fundamental part of the implementation. However, streamlining processes is also important on technology initiatives that are narrower in scope, such as CRM. Because process improvement is so important, communications and change management are a standard part of every well run enterprise software deployment.

In a previous column on change management, I note the need for project communication:

Managing transformation and change is one of the most difficult aspects of enterprise software implementations. In my study of IT failures, poor communication ranks high on the list of key issues that cause problems on large projects.

The PMI studies give voice to the truism that communications is critical to project success, but the concept itself can be problematic. The Merriam-Webster dictionary defines communication as:

1. an act or instance of transmitting
2. information transmitted or conveyed
3. a process by which information is exchanged

Many executives treat communication and change management according to definitions one and two, ignoring the third, and by far most important, point. For these executives, communications could more accurately be called "management directives pretending to be discussions."

A study on the ROI of communications and change management, by consulting firm Towers Watson, demonstrates an emphasis on transmitting information rather than fostering dialog and discussion. The following chart shows how the report defines "effective communication." The following chart shows how the report defines "effective communication," with most points implying one-way transmission of information:

Towers Watson's definition of communication in a change context illustrates the point even more strongly. In this graph, communication is clearly a one-way flow rather than a bi-directional dialog: 

The Towers Watson approach mirrors conventional wisdom so I am not intending to single them out. However, it is time for executives to add careful listening to their arsenal of strategic skills; I would argue that treating communications as a one-way transmission contributes to many IT failures. 

Without a bi-directional flow of information, you will not engage employees, gain their buy-in, or ensure they actually understand the communications you send. Instead, shift your communications paradigm away from transmitting information to cultivating collaboration and knowledge sharing. Learning to listen is the key skill in this new paradigm.

Read more from the Beyond IT Failures blog

Jo Jo White is profiled in a biography called, "Make It Count, and holds the team record for playing 488 consecutive games, an obviously extraordinary accomplishment. Jay Wessel has been with the Celtics for 23 years, so both men know the team inside and out.

The subject of teamwork is a consistent theme throughout the discussion, which you can watch on the video embedded at the bottom of this post. Jo Jo credits coach Red Auerbach for bringing together the players needed to make a winning team:

It took somebody who understood how to put the right thing together and we were fortunate to have him.... [Most important is] how you use your individual talent on a team to benefit the other guys on the team.

I asked Jay to explain how the concept of teamwork affects his approach to technology at the Celtics:

Working in a team is so important, otherwise, you are doing technology for technology's sake, building computers and putting together networks just for the sake of doing it. What I find more exciting is working with the other groups here, [such as] ticketing, finance, marketing, sales also the basketball coaching staff.

From a technology perspective, Jay focuses on bringing technology to the arena, maintaining back office business systems (such as ticketing and CRM), and supporting the coaching staff with technology. Mobile, analytics for team statistics, video, are among the technologies that help create an appealing and entertaining stadium experience to attract fans.

Although corporate sponsorships are an important source of revenue for the Celtics, team finances rely primarily on ticket sales. For this reason, most professional sports organizations, including the Celtics, invest significantly in technology to create an attractive experience for fans. One sports CIO summarizes this goal with the imperative mandate to get "butts in seats."

Professional sports innovation: Patriots, Celtics, Red Sox, and Bruins

The Celtics use analytics to link data on how fans use mobile and interact on social media, such as Facebook, with who buys tickets and for which games. Combining analytics with customer data enables the team to tailor the services and information it provides to specific groups of fans, while targeting marketing efforts more narrowly to specific audience segments. 

Although technology is the heart of the CIO role at the Celtics, the style of work is highly collaborative. Jay is a technologist by training, but the approach is human-centric:

Understanding what [departments in the Celtics organization] are doing, how they do their job, how they would like to do their job, and then figuring out how we can develop systems that actually help them do it. I like that human interaction and the teamwork of technology and the business side or the coaching side, which really for us is business, much better than building systems for the sake of systems.

From a CIO perspective, the key lesson is this: for most organizations, technology is easy compared with the challenge of deeply connecting with users. Many CIOs claim to understand their business users, yet there is frequently a disconnect between the CIO's opinion and the perception of folks on the business side.

Two key factors that drive technology at the Celtics are understanding business requirements (including back office functions, arena operations, and coaching) and a core belief in teamwork. Professional sports teams, unlike most organizations, can legitimately point to teamwork as a defining business competence. For this reason, professional sports can help us come to grips with partnering and the need to put aside ego in service of the common benefit 

=======

The conversation with Jo Jo White and Jay Wessel is part of an ongoing series called CxO Talk. Each week, co-host Vala Afshar and I talk with senior leaders to learn from their experience and gain their advice. 

The video below includes a passionate inside view of the Celtics. Although this post focuses on technology, the video includes extensive discussion with Jo Jo White about his experience playing for the Celtics:

With this in mind, I read with great interest the criteria that Richard Branson uses when investing in technology startups. Branson's points are sufficiently broad to apply in many investment situations, but serve as a superb checklist for enterprise startups when defining their business model. 

Beyond a mere checklist, Branson's five points describe an approach that wise entrepreneurs can use for ongoing self-evaluation and reflection. As you read the list, consider the extent to which your own company measures up. 

Here is Richard Branson's list of technology investment criteria, as published in Entrepreneur magazine. Carefully examine this list and compare your own startup in a thorough and objective manner. To the extent possible, try to ensure that your venture meets every single point described below, without exception:

1. Does your company offer a smart, simple solution that improves customers' lives? If I understand a startup's product or service on first glance, then customers will too -- and if it solves a problem that needs fixing, there's a good chance that some will buy it.
2. Is your company's use of technology disruptive? There are many companies that dress up their products by putting lights and screens on them, but don't exactly make a difference to anyone's everyday life. Such products may attract attention, but unless the technology adds easy functionality, the customers won't be back a second time.
3. Does your company offer customers greater choice and better access? However small a company, its founders should try to expand people's opportunities and choices.
4. Does your company's product or service encourage customers to share their work or experiences? The development of Web-based applications has enabled collaboration on a scale that was unimaginable 30 years ago. In almost every industry, more sharing is helpful and useful: between friends and family members; between colleagues, and sometimes between customers.
5. Does your company care enough about people and the planet to use business as a force for good? Every company can make a difference. New businesses can tackle local problems, growing businesses can tackle national problems, big businesses can tackle global problems. 

These questions are simple and practical, yet deceptively sophisticated and difficult to achieve. Therefore, cultivate a corporate culture that examines questions such as these on an ongoing basis. The right time to ask such questions is now.

During a conversation with Ben Haines, the CIO of Pabst Brewing Company, we focused on cloud transformation and the impact on IT. Ben believes cloud software can drive both efficiency and innovation, which his approach to buying and deploying technology reflects. The discussion is part the CxO Talk series that I conduct each week with co-host Vala Afshar.

Enterprise startups should pay special attention to the conversation with Ben, because he provides valuable advice for selling into large companies. Ben is a genuine cloud guy; he gets it and understands both the benefits and risks of working with smaller companies. 

Inspired by the CxO Talk chat, here are six tips for startups that want to sell into the enterprise:

1. Prepare before you call. With all the information available on the web, in blogs, and in social media, it is imperative to learn the customer's issues and priorities before you call. According to Ben, failure to follow this simple rule means disqualification from any relationship:

If I can read about it on the web, don't bother coming in to talk to me about it. You are just wasting my time. I'm not going to spend much time telling you about my problems. I don't answer my office phone, because 99 percent of the calls are, "I'd like to know what your IT strategy is and how we can help you." I just delete those.

During my recent conversation with the CIO of Intel, Kim Stevenson, she echoed these remarks. Like Ben, Kim expects sales people to walk in knowing her agenda, goals, business environment, and strategic plans.

2. Keep the price low. This may sound obvious, but offering high value (meaning, low cost combined with a great product) is necessary to create a compelling argument when negotiating with a CIO. Maybe IBM can charge top dollar, but your startup is not IBM.

3. Engage the customer's team. Managers in large organizations are usually constrained by established processes, difficulty gaining consensus, and risk aversion. Allow your customer to help shape the product and seek their guidance on real business problems that existing vendors have overlooked or not addressed well. Engagement and communication are the keys to surviving difficult moments that inevitably arise during any relationship. Become a part of the family and the customer may well make you feel at home.

4. Present the value proposition clearly. If your value and goals are murky, the customer won't buy. Clarity is your friend and vagueness will drive away deals.

5. Sell rapid innovation and then deliver the promise. Working in a startup, it's easy to take the rapid pace of innovation for granted. Your startup can help a large company augment its own R&D budget by purchasing innovation less expensively, and faster, than they could build internally. On the other hand, if you screw up on execution and service delivery, then the enterprise buyer will dump you fast.

6. Be transparent and social. When evaluating a startup, Ben researches the founders to determine "their street cred." Being on social networks and writing a blog helps communicate what you are doing, where the company is heading, and what your team is thinking. All these activities bring transparency, which makes potential buyers more comfortable.

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Among the cloud startups that Pabst works with:

• Secret startup in stealth mode - data management
• Jobvite - recruiting platform
• Docusign - end-to-end document lifecycle and electronic signatures
• Okta - identity management and single sign-on
• Box - file storage and sharing
• Tidemark - enterprise performance management

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This video includes the entire Ben Haines conversation. If you want to learn about cloud transformation, the impact on IT, and the benefits of cloud then watch the whole thing: 

Also read:

• Intel CIO presents the path to #Rockstar IT
• Marketing and IT tensions: 'CxO Talk' debuts today
• CxO Talk episode two: Big data, analytics, and HR technology
• CxO Talk: Gartner says 'provide and pray' collaboration won't work
• Enterprise startups against the big guys: CxO Talk 7
• CxO Talk: Trust, engagement, and influence for the CIO

In Boston, a group called the Massachusetts Military Heroes Fund planted 33,000 flags on the famous Boston Common. Each flag represents one of the Massachusetts soldiers lost in battle from the Civil War to the present. 

Walking among the flags, I saw the person pictured in the photo above. She took her time, as if to experience and savor memories and sadness. I felt honored to capture the moment.

The families of veterans can face a difficult time. Here are a few organizations that support these families:

• U.S. Department of Veterans Affairs
• Corporation for National and Community Service
• Veterans' Families United Foundation
• Veterans of Foreign Wars

In our discussion, Dion proclaims the era of IT essentially over, with line of business functions inevitably absorbing technology and leaving the CIO to reign as steward over nothing more than low-value technical plumbing. Think phone systems. Dion's perspective appears fatalistic, implying highly devalued IT departments that merely provide basic infrastructure while other groups in the enterprise absorb strategic aspects of technology.

Dion explains that, "our existing model for IT is broken in a highly proliferated universe," because organizations increasingly demand rapid access to solutions with a relatively short lifespan. Therefore, he calls the traditional IT model a "choke point" for technology innovation in the enterprise.

Following the CxO Talk show, I asked Dion to elaborate his views regarding the state of IT in its present form:

It's pretty clear to most technology leaders that traditional IT, as we know it, is undergoing the biggest challenge in its history. The advent of intense competition and tech innovation from outside the organization has reached an unprecedented and -- more importantly, an unsustainable level.

Internal business customers can now far more easily obtain IT service from the cloud, SaaS products, app stores on mobile devices, and outsourcing partners. And they can do it far more cheaply, faster, and with less hassle this way. IT departments are now the hardest way to get things done (albeit there are many risks for shadow IT as well, though widespread problems due to it are not emerging as fast as many would have thought.)

BYOD is just another proof-point and canary in the coal mine as cheap, agile, disposable consumer tech remakes today's IT landscape. This means the infrastructure of IT in most organizations will recede into the cloud while digital strategy moves into other areas of the organization, including the much-discussed new role of Chief Digital Officer.

The global CIOs I talk to in general see this writing on the wall: The overly-centralized IT department as the provider of all technology is just as outdated a concept as sourcing all your IT from one vendor, like we did with Microsoft in years past and IBM before then.

It's a very challenging time to be in IT, yet also perhaps the time of greatest opportunity. IT seems to be splitting into 1) tactical infrastructure and 2) strategic tech innovation as applied to the business. The former is heading largely to the cloud, while the latter is going to move across the C-Suite in a variety of interesting ways.

These arguments are hardly new. For example, in 2008 I wrote a piece called, "Is IT becoming extinct?," which summarized a variety of reasons explaining why IT has lost influence in the enterprise. I followed that a post titled, "5 tips to prevent IT extinction," that offered advice to a scared IT crowd. In 2012, I also wrote about a devalued future for IT. However, since 2008 more data has emerged to strengthen Dion's argument. 

For example, Dion calls out data that shows flat IT budgets while lines of business increase their spend on technology. Gartner presents this graph, showing flat IT budgets:

Meanwhile, this next chart, from Retail Information Systems, shows the growth of technology budgets in retail marketing between 2012 and 2015. The chart demonstrates that marketing will have significant increases in technology spending over the next few years. Although focused on retail, similar shifts are happening in many industries:

Dion's comments are also consistent with recent survey data described in a Harvard Business Review blog, showing a high level of CEO dissatisfaction with the current state of IT:

57% of the executives expect their IT function to change significantly over the next three years, and 12% predict a "complete overhaul" of IT

With project failures remaining at high rates and IT continually blamed for lack of responsiveness, it's no wonder that the existing model seems to have broken down. But, this problem will not be solved by simply waving a magic wand that transfers technology to marketing or other groups inside an organization. The problem and solution are more nuanced than that.

Simple technology transfer arguments fail to recognize that when IT becomes less involved delivering specialized technology to lines of business, those groups must learn to become deep technology experts. When lines of business transform into IT departments, they will face similar challenges as IT itself. Unless, of course, we give the easy and fun stuff to lines of business and leave IT with the harder problems.

(This discussion does not even address core computing functions that must remain centralized — security, data integration, bandwidth, and network infrastructure, for example, should remain basic IT activities.]

The ability for lines of business to absorb massive change relating to technology will be an ongoing challenge in this new world. Therefore, the real solution is a new kind of collaboration between IT and lines of business.

'The most innovative CIOs I talk with recognize the essential importance of partnerships to address these issues. For example, during another episode of CxO Talk Kim Stevenson, Intel's CIO, said:

The next decade is about business transformation and business efficiency; how does IT help the business grow? You can't do it alone, it's always in partnership with the business, but IT can be a catalyst to that business growth. There are no IT projects; they are all business projects today.

During yet another CxO Talk conversation, Gartner group vice president, Mark P. McDonald, also elaborated on partnership between IT and the business:

Turning sparks into flame and growing that flame requires a scalable, very capable platform. That's what the CIO brings to the table. The most powerful combinations we've seen are the CIO and CMO working together with a shared goal to grow the business. When my goal is to grow the business, everybody has the potential to win.

On a different episode of CxO Talk, the CMO of LexisNexis, Steve Mann, said that marketing tasks such as campaign deployment and management, for example, require "intricate knowledge" that IT cannot fulfill unless they provide dedicated resources to marketing. Steve's comment further implies the kind of partnership that both Kim and Mark advocate.

Yes, the relationship between IT and lines of business are ambiguous and fraught with difficulty. However, the bottom line is this: partnership based on deep collaboration is the only solution that will work. Both IT and the business need each other; both sides must adapt and bend to the winds of change.

If you are a CIO, the message is clear: gain a more sophisticated awareness of business needs, actively forge cooperative partnerships with your business counterparts, and learn to say "yes" when the business seeks assistance. Your survival depends on taking these steps.

===============

CxO Talk is a weekly talk show that explores the tension between technology and lines of business in the enterprise. Our guests include senior level executives, analysts, and other top thought leaders who can offer a valuable perspective on the issues.

Here is a video of the entire conversation with Dion Hinchcliffe:

Read more from the Beyond IT Failures blog

More important than "feeds and speeds" is the CIO's ability to drive strategic business goals such as increasing revenue, enabling innovation, and helping the company enter new markets more quickly.

Against this backdrop, I was delighted to welcome Intel's chief information officer, Kim Stevenson, to the latest episode of CxO Talk. With co-host, Vala Afshar, we had a fascinating conversation about a range of subjects including IT strategy, driving relationships with lines of business, social media, importance of encouraging girls to enter technology, employee development, trust and credibility, shadow IT, and even baseball. 

Throughout the discussion, which you can watch in the video below, the primary emphasis reflects how IT at Intel contributes to crucial business objectives. Based on a term coined by CIO Phil Komarny, I call this approach #Rockstar IT, because it gets to the heart of how IT can increase value in the business.

Here is the entire 45-minute conversation — although I outline a few highlights below, the recording presents a rich and inspiring wealth of information:

As CIO of Intel, with 6500 people in her IT organization, the lessons Kim presents in the video are best practice examples based on having sufficient resources to solve difficult management and strategy challenges. Although most CIOs operate on a smaller scale, the lessons and goals she describes are ultimately relevant to companies of all sizes.

Kim describes achieving operational excellence as "table stakes:"

The CEO and board of directors really want IT to add value to the company. Intel is diversifying, we're adding new businesses, in software and services and foundry models, and all of that requires a different IT model. The single most important thing is all of that is happening very fast and IT has to enable the velocity of these business changes, so that Intel can transform and accelerate our position in the markets in which we aren't the leader today. IT is a critical component in that, to help the company be successful in those new markets.

Regarding the practical role of IT in a technology company, she discusses how IT is a testing ground for Intel's own products:

Most of intel is about creating technology; IT is about applying that technology to its fullest potential. IT are the "appliers."

It makes to have a very good relationship with the creators of technology because are able to give them real enterprise use cases, we are able to help debug, and see real operational experience with their products

The conversation highlighted the evolution of enterprise IT, from a back-office technology provider to customer-centric business partner:

The next decade is about business transformation and business efficiency; how does IT help the business grow? You can't do it alone, it's always in partnership with the business, but IT can be a catalyst to that business growth. There are no IT projects; they are all business projects today. There isn't a project today that doesn't require IT and if you are not using IT to make your business better, than you are shortchanging the real opportunity.

During a segment about shadow IT, Kim made clear that IT is responsible for meeting business unit needs. Personally, I believe this view is precisely correct: 

The business units make those decisions because they are trying to accomplish their objectives in the way that they think is the most efficient. If they are not choosing you, there is a reason.

I never bash shadow IT because they are fulfilling a need that ultimately IT could not fulfill. Once you get your head around that principle, then you can start working to figure out how we can best fulfill it for the company.

Kim's perspective reflects a highly business-oriented approach to IT standing in stark contrast to IT shops that see their primary mission as delivering technology projects on-time and within budget. Although operational and delivery capabilities are essential, they are not a substitute for contributing revenue, innovation, process improvement, and efficiency.

CIOs who want to learn from Intel's experience should take the following steps; this is a mini tutorial on building #Rockstar IT:

1. Watch the video embedded above closely, paying careful attention to Kim's core perspective on IT's role, responsibilities, and relationship to the business.
2. Conduct a realistic self-assessment to determine the capabilities of IT in your own organization; discovering areas for improvement creates the foundation and opportunity for achieving goals.
3. Create credibility and influence by ensuring that IT delivers operational excellence, to use Kim's term.
4. Build on that credibility by engaging with the business, listening to their needs, and establishing relationships based on trust.
5. Finally, identify ways to help the business innovate, make money, and be more efficient.
6. Rinse and repeat. Improvement is a continuous process not a one-time event.

When IT takes its rightful place as an equal participant with other line of business and administrative functions, then the real magic of #Rockstar IT can emerge and flourish. Making this happen is the CIO's job. 

Also Read:

• Marketing and IT tensions: 'CxO Talk' debuts today
• CxO Talk episode 1: Guy Kawasaki on influence for APEs
• CxO Talk episode two: Big data, analytics, and HR technology
• CxO Talk: Microsoft, Salesforce.com, CRM, and the science of hugging
• CxO Talk: Gartner says 'provide and pray' collaboration won't work
• Enterprise startups against the big guys: CxO Talk 7
• CxO Talk: Trust, engagement, and influence for the CIO

Read more from the Beyond IT Failures blog

The conversation got me thinking about the importance of trust and influence for chief information officers. Too often, the CIO is left behind in strategic conversations because his or her influence and credibility are not sufficiently strong inside the company; that's an issue for any CIO who wants to drive organizational transformation.

Five Steps to Build CIO Relevancy

Based on my research and conversations with many senior executives, a CIO can take affirmative steps to cultivate organizational influence. However, any action should begin with understanding how influence interweaves with trust, credibility, and relationship.

The equation is simple: trust equals relevance and credibility in the context of a relationship. Expressed differently, meaningful engagement is the gateway to influence.

If you want to gain influence inside your organization, take the following steps:

1. Become relevant by offering constituents useful information, advice, and services. Many stakeholders view IT (and the CIO) as primarily a supplier of technical services and infrastructure, a view that devalues the entire information technology function. To combat this perception, you must listen hard -- learn to understand what stakeholders find important and then address those needs. Sadly, the people who most need this message usually think it does not apply to them.
2. Drive credibility by increasing relevance. CIO credibility arises when IT delivers relevant activities and projects in reliably and consistently. When asked about this issue, Shakespeare said that credibility happens automatically when IT does what stakeholders need and fulfill its commitments with operational excellence; in the words of Shakespeare: "And it must follow, as the night the day."
3. Forge relationships based on credibility. Trust happens over time; it's not a single event. Therefore, becoming influential requires you to develop an ongoing pattern of relevance and credibility. Relationship happens when you engage stakeholders, listen carefully, and then offer practical, compelling, and useful solutions. Establish this pattern and mutually beneficial relationships are inevitable.

For a CIO (or anyone, really) who wants to play a strategic organizational role, all these components work together as a seamless model for daily interaction. The real key is recognizing trust and influence as facets of a single whole and not isolated attributes to implement independently.

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This episode of CxO Talk offers suggestions on driving the culture changes needed to take maximum advantage of social media. The conversation includes a discussion of trust and influence, which depend on credibility and can only flourish in the presence of long-term relationship.

Here is this week's entire CxO Talk discussion:

Also Read:

• Marketing and IT tensions: 'CxO Talk' debuts today
• CxO Talk episode 1: Guy Kawasaki on influence for APEs
• CxO Talk episode two: Big data, analytics, and HR technology
• CxO Talk: Microsoft, Salesforce.com, CRM, and the science of hugging
• CxO Talk: Gartner says 'provide and pray' collaboration won't work
• Enterprise startups against the big guys: CxO Talk 7

Read more from the Beyond IT Failures blog

Here is the entire video conversation:

The conversation starts with the venture business and how Evangelos’ firm approaches investing. It is interesting to note that his firm sees about one thousand companies each year, but invests in fewer than ten. Yes, it's competitive! If you are interested in this topic, watch the video interview, because Evangelos discusses the venture capital business in some detail.

Cloud disruption

Many cloud advocates believe startups (and newly-public companies) will disrupt existing enterprise software vendors, by offering narrowly-focused products that are more innovative, cheaper, easier to use, and faster to deploy. According to this perspective, enterprise buyers will increasingly use pre-built, cloud-to-cloud integrations to weave these new, focused products together into a seamless mosaic of software from different vendors. 

Evangelos has invested in companies, such as PivotLink and Host Analytics, which are taking advantage of this trend. Given all the vendor hype from startups on this issue, I asked Evangelos for his thoughts (which I have edited):

For new applications at the periphery, there is a great opportunity for change, especially in areas where new core systems are being developed. Systems of engagement are an example, because the enterprise does not yet have incumbent vendors for these systems at the core. Therefore, there is opportunity for new companies to provide such systems.

Evangelos continues that business units and functional departments are leading the way in this disruptive cloud transition. Departments such as marketing, sales, and the CFO's office are open to new tools and technologies that support innovation and improvement in their parts of the company: "A startup with the appropriate solution, that is clearly differentiated, can inject itself into departments in the enterprise."

This "new class of applications," as Evangelos terms it, can "enter the enterprise by means of the business unit." He notes that these applications must integrate with core enterprise systems, which helps shrink the scope of established systems. Consequently, innovative and cost-effective startups have an opportunity to replace functionality that legacy vendors supplied in the past.

Evangelos correctly points out that large companies do not lightly make the decision to replace core systems, which is a significant barrier to smaller vendors that want to displace incumbents:

Large companies will not rip out and replace core functionality with new systems even if the new software does not have the same functionality. However, the purview of core systems is shrinking, supplemented by these new systems coming to market.

Although startups face obstacles when selling to the core processes of large companies, opportunity exists when large organizations create new processes; for example, when large companies add processes to embed social computing and mobility into everyday operations. 

In smaller organizations, cloud startups can more easily become the new system of record because there are fewer large legacy systems in place. Today, smaller companies are more likely to adopt cloud vendors as their core systems. 

Salesforce.com and the disruptive cloud

In response to a question from Twitter, we discussed the nature of salesforce.com's disruption in the enterprise, particularly when the company started. Evangelos explains that salesforce.com created a new business model around sales force automation and contact management, rather than actually disrupting the business process itself:

Salesforce.com showed that cloud could be done with large scale and different economics than in the past. Absolutely innovation. Cloud applications would not have existed until salesforce.com showed the way. They created an entire industry.

To enable the business model, salesforce.com created important technology innovations including multi-tenancy and the zero footprint client, which allowed them to create scale at low cost.

Final thoughts

This episode of CxO Talk raises fundamental issues about the nature of innovation and cloud disruption in enterprise software. Evangelos Simoudis is an experienced entrepreneur and a highly informed VC investor, so his views are worth considerable attention.

As the show closes, both Evangelos and I acknowledge a debt of gratitude to the Enterprise Irregulars; we both feel privileged to participate in the group and be members. 

Also read:

• Enterprise software wars: 5 points of advice for CIOs
• Marketing and IT tensions: 'CxO Talk' debuts today
• CxO Talk episode 1: Guy Kawasaki on influence for APEs
• CxO Talk episode two: Big data, analytics, and HR technology
• CxO Talk: Microsoft, Salesforce.com, CRM, and the science of hugging
• CxO Talk: Gartner says 'provide and pray' collaboration won't work

CxO Talk: Gartner says 'provide and pray' collaboration won't work

Mark's comments shed light on reformulating IT strategy to reflect changing corporate needs and the evolving relationship between the CIO and CMO:

Turning sparks into flame and growing that flame requires a scalable, very capable platform. That's what the CIO brings to the table. The most powerful combinations we've seen are the CIO and CMO working together with a shared goal to grow the business. When my goal is to grow the business, everybody has the potential to win. When my goal is to control costs, there is automatically a system of winners and losers.

Listen to this one-minute video clip to experience Mark's passion and insight about the topic:

Strategic CIO implications

The shift in technology budget allocations has two important implications for the CIO and IT:

1. IT will become increasingly commoditized, devalued, and irrelevant unless the CIO gains a stronger sense of strategic purpose.

Supporting your organization's strategic goals is the most direct route to establishing relevancy in the enterprise. It's not rocket science but rather common sense — meet business users' needs and of course they will perceive you as being relevant. I have previously written about CIO relevancy:

The world of CIOs and IT is likely to split into infrastructure providers and innovation partners. To become a genuine partner to the business, start taking steps today. If you don't make a change soon, your IT organization may end up a commodity shop in a transforming world. 

2. Chronic conflict between IT and the business does exist.

In the current economic environment, many organizations want IT to innovate and simultaneously reduce costs. It is up to the CIO to resolve these tensions through improved collaboration with the business. The following diagram presents a view of chronic conflict as applied to IT and the CIO:

Chronic conflict between IT and the business will suck your life away in an endless sea of frustrating pain; far better to work closely with leadership, be strategic, and define explicit IT priorities based on open communication with the people setting business priorities.

Thanks to author, Gene Kim, for formulating this concept in a CIO innovation workshop he and I co-presented. For more information on chronic conflict, see the work of Eli Goldratt. 

Also read:

• CxO Talk: Gartner says 'provide and pray' collaboration won't work
• Engage or die: Five lessons from a CIO innovation workshop
• Research: The devalued future of IT in a marketing world

Read more from the Beyond IT Failures blog

CxO Talk episode five is a powerhouse of information on enterprise social media and strategic advice for chief information officers.

Social collaboration beyond "provide and pray"

The conversation begins with a discussion of the social media maturity model that Mark presents in his book, The Social Organization, which presents a straightforward, business-oriented view of collaboration technology. Here is a diagram of the model:

Mark, and co-author, Anthony J. Bradley, designed the maturity model to help organizations move beyond a "provide and pray" mentality, in which management provides social media technology and prays that something good will happen. Watch the CxO Talk video, embedded above, to hear his in-depth comments.

Mark says that collaborative communities can tap the power of employees across the organization, reduce siloes, and encourage employees to prioritize organizational goals over personal or departmental agendas. He continues that implementing social collaboration successfully requires establishing a goal or purpose, along with "just enough structure" to make the program work. In other words, management should create rules of engagement and get out of the way, avoiding too many guidelines and mandates.

Mark introduces the concept of "relationship leverage" to help employees understand cultural expectations and encourage them to adopt social collaboration for business purposes. For example, senior executives can blog about their expectations and goals, while demonstrating what appropriate online social behavior looks like. Mark describes it the minimal structure needed to "create the informal value that comes from better communication."

Management should not push social media with generic goals, such as, "We will be more collaborative." Instead, Mark recommends establishing a meaningful purpose to magnetize participation and encourage employees to volunteer their "time, attention, purpose, and interest." He advises management to build a coordinated monitoring body that will support grassroots growth while maintaining formal executive support. In this context, traditional, top-down demands are less effective than encouraging group participation to create community growth collaboratively and organically.

CIO / CMO wars: "Technology is not a zero-sum game"

We asked Mark to explain a recent Gartner report that predicts CMOs will eventually control a larger share of technology budgets than the CIO. It's an important issue because large and small software vendors quote this number frequently.

Mark puts the issue into context with two points:

1. Distinctions between "IT" and "technology." The concept of technology is far broader than the platforms IT provides; for example, some companies place Google advertising investment into their technology budget. Although spending on core applications, infrastructure, and analytics will not migrate away from IT into the business, it is true that front office activities touching technology are likely to grow over time.
2. Increasing technology spend outside of IT is not a zero-sum game. Cost savings have become a focus point for IT, which ultimately devalues both the CIO and IT, despite reasonable business rationale for wanting to reduce costs. Therefore, Mark says conversation must shift from, "How IT will control costs?" to "How will technology support growth?".  These questions can precipitate a strategic change that drives a shift in the relationship between IT and the business.

Also read:

• Research: The devalued future of IT in a marketing world
• Three tips to escape the tyranny of IT metrics
• Marketing and IT tensions: 'CxO Talk' debuts today
• CxO Talk episode 1: Guy Kawasaki on influence for APEs
• CxO Talk episode two: Big data, analytics, and HR technology
• CxO Talk: Microsoft, Salesforce.com, CRM, and the science of hugging

Read more from Beyond IT Failures

The discussion includes an insider's look at the CIO and CMO roles, along with advice for technology vendors selling to senior executives.

Steve Mann on the CMO role

According to Steve, CMOs "sit at the intersection of creativity and strategy." Steve says he partners with the CEO to translate his company's vision into marketing strategies that deliver revenue and customer satisfaction:

The CEO's strategy comes to life in the various strategies and channels the CMO uses to touch the market. The company's branding, communication efforts, demand generation, pricing and packaging are all manifestations of translating a business strategy into a marketing strategy.

Digital, social, and mobile. Translating a business strategy into a marketing strategy affects what the business does digitally. For example, ecommerce on the web site and creating products for sale electronically are "digital personas" of the company. Among Steve's key measures is the degree to which LexisNexis digitizes its marketing and moves to a "digital style" of engagement.

Steve believes that mobile is a primary platform for translating marketing strategies into "something that is consumable," although the company wants to be platform-agnostic. Although he looks at all channels, Steve is more concerned with the engagement model than the consumption device. Therefore, LexisNexis follows "social first," rather than "mobile first," as a primary strategy to drive market engagement.

Relationship with IT.  Prioritizing projects and budget is a tension point, because IT may focus resources based on its own strategic goals rather than placing marketing goals and efficiencies first. To bridge this gap, the CMO must recognize that IT has valid, yet competing, demands for limited resources.

When asked whether he ever bypasses IT and buys cloud solutions directly, Steve remarks that having web development and marketing operations teams within the marketing organization is a "great thing." Certain marketing tasks such as campaign deployment and management, as an example, require "intricate knowledge" that IT cannot fulfill unless they provide dedicated resources to marketing. Although not trying to cut IT out of the loop, Steve does ask IT to help his organization get to market faster.

Phil Komarny on the CIO role

Phil explains that the CIO must support core organizational objectives, much as the CMO does. In higher education, these goals include increasing enrollment and student retention, as well as establishing digital initiatives to communicate with stakeholders across all parts of the business.

He continues that cloud, social, and mobile computing help remove siloes, which can blur roles while helping people across the organization work together. During conversations with Seton Hill's director of marketing, Phil has asked whether IT can help reduce marketing spending by developing platforms the school can own and reuse.

Phil is deliberately consumerizing his infrastructure to create a more collaborative and social environment. For example, he built HTML5 portals to bring together data from multiple systems, including ERP, to make interacting with systems and data easier for users. When management uses these personalized views on mobile devices, they can make decisions based on real-time data during meetings; instead of requesting reports from IT, as in the past, management can simply look up the data they need, on the spot.

Are CMOs "attention-seeking land grabbers invading IT turf?" Phil responds to this impertinent question by saying that some CIOs and IT organizations "deserve" marketing to go around them. He explains:

If you are not around the table adding to the discussion, you don't deserve to be at the table. Too many IT departments "default to no," which does not work in today's cloud, social, and mobile world. 

Phil's team plays a significant role in the procurement of business applications because IT has "earned the right to be part of that conversation." Getting to this point required Phil to transform the IT organization; today, he says, "Everything we do is based on the user experience. Everything." 

Sales advice to vendors

Steve's environment at LexisNexis is based on the Oracle stack, including Seibel 8.1 for CRM. He also has several Salesforce.com deployments ongoing, due to their shorter 30-60 day implementation time. The Oracle and Salesforce.com implementations each integrate with Eloqua as a marketing automation umbrella; he wants both systems to share the same master data for customers and prospects. 

Steve says that vendors fall off his radar when their products are "too difficult to understand." He points to Semphonic as companies that quickly understood his needs and rapidly created an execution plan.

Phil's current software projects at Seton Hill University include Workday and Salesforce.com. He is concerned about SaaS vendors that do not make clear what the cost of ownership will be in year one. He says, "It's becoming difficult to judge cloud implementations; there are hidden costs requiring due diligence."

Both Steve and Phil want to engage with vendors over social channels, including Twitter and LinkedIn. Steve suggests three vendor ideals:

1. Transparency on strengths and weaknesses
2. Openness to learning new ideas
3. Collaboration and willingness to partner

Related stories

• Marketing and IT tensions: 'CxO Talk' debuts today
• CxO Talk episode 1: Guy Kawasaki on influence for APEs
• CxO Talk episode two: Big data, analytics, and HR technology
• CxO Talk: Microsoft, Salesforce.com, CRM, and the science of hugging

Larry Dignan's ZDNet article on Tidemark Storylines.

Looking at Tidemark I wondered, "How can startups best compete against big companies such as SAP and Oracle?" Although not a boxing fan, the following words from Muhammad Ali came to mind as the answer: "float like a butterfly and sting like a bee."

In this short video, Muhammad Ali speaks this famous phrase and presents a competitive view that enterprise startups should examine closely:

Here's a transcript of the video:

I'm gonna float like a butterfly and sting like a bee
George [Foreman] can't hit what his hands can't see
Now you see me, now you don't
He thinks he will but I know he won't
They tell me George is good but I'm twice as nice
And I'm gonna stick to his butt like white on rice
Cassius [Clay, Ali's former name] is the greatest of all time, of all time!!!

Ali's comments reflect innovation, agility, and confidence backed by execution and skill. It turns out that Tidemark's Gheorghe, who grew up in communist Romania, studied Ali as a role model:

There was lack of everything from food to books to basic freedoms. I remember Ali saying 'impossible is nothing' so fast, so brilliantly confident, that the seeds of freedom were set for me. I never forget it and it still guides me every day. Impossible is nothing.

The video below shows Muhammad Ali putting agility into practice — watch him dance lightly with intelligence, focus, and intense determination. This is definitely the right way to compete as an enterprise software startup: