I

Global
Intelligence
for the CIO

www.i-cio.com

Issue 14 JuLYsePT 2012

Special Report
How the worlds smartest
companies are maximizing
the value of big data
Management Upgraded
New models for running
more exible, dynamic
organizations
Top of My Agenda
UK Government CIO
Andy Nelson on creating a
public sector CloudStore

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Global
Intelligence
for the CIO

08

14

July- Sept 2012

44

50

07 The Quarter How one CEOs

38 Top of My Agenda Andy Nelson,

inaccurate rsum has put the spotlight on business

integrity; a round-up of the latest global CIO
appointments; essential reading for IT leaders;
and our report from Fujitsu Forum 2012 in Tokyo,
including the keynote speech from Fujitsu president
and CEO Masami Yamamoto.

CIO of the UK Government, on how the recently

launched public-sector CloudStore is helping to
slash costs and increase exibility.

14 SPECIAL REPOR T

sectors, agility and rapid innovation are now higher

priorities than eciency which means organizations
are needing to nd alternatives to traditional
management hierarchies. What part is IT playing
in shaping these new models?
l Case study: How building materials manufacturer
CEMEX is using technology to reduce bureaucracy
and transform the way its people work.

The lure of big analytics

l Analysis: Some of the worlds foremost thoughtleaders and practitioners in the eld of big analytics
on how smart organizations are turning big data into
big business payback.
l Big data speak: Decoding the new vocabulary
of big analytics.
l Boardroom View: Rob Jennings of nursery goods
company Mamas & Papas.
l Data Feed: The big numbers behind the
information revolution.
l Barometer: Four technology leaders explain their
objectives for big data.

40 STRATEGIC FOCUS

Managing: the future In many business

44 STRATEGIC FOCUS

Management re-invented Leading

business thinker Gary Hamel on the key role CIOs
can play in rethinking organizations management
practices to enhance innovation and agility.

24 INTERVIEW

47 This Way Up How Wayne Shurts, CIO

The new economics of global

innovation Management guru and one-time

of Supervalu, is drawing on deep business experience

to transform IT at the $36 billion US grocery group.

professor in residence at GE Vijay Govindarajan on

why multinationals need a two-way ow of innovation
between emerging and developing markets and fast.

50 Out of Ofce Javier Fransoy, CIO of

29 Innovation Analysis of the mobile

payments revolution in the West; the search for
the next Silicon Valley; superfast thin client
technology; the new heights to which CIOs
bosses expect them to rise; and more.

leading Argentinian our and vegetable oil producer

Grupo Molino Cauelas, on his passion for polo.

Editors letter
Welcome to the latest edition of I: Global Intelligence for the CIO, the exclusive publication for group
CIOs, brought to you by global ICT company Fujitsu.
This issue of the magazine could easily have been billed as an Innovation Special, with articles
throughout digging deep into the changing forms of innovation, the routes to value creation and the
way CIOs are working with their C-level colleagues to build innovation-driven organizations.
The big picture is provided in our cover story where we interview Vijay Govindarajan, recently
recognized as one of the worlds top three most inuential business thinkers. After spending two years
embedded at General Electric as its rst professor in residence and chief innovation consultant, VG
(as hes known) argues that Western multinationals need to follow the example of PepsiCo, Harman,
Deere & Co, P&G, and, of course, GE, and change their globalization strategies to establish a twoway ow of innovation between emerging and developed markets. Without such a focus on reverse
innovation, he argues, todays multinationals will face an inevitable decline, as new forces in China,
India and elsewhere eat their lunch.
The theme of innovation is also under the microscope in our Strategic Focus, which examines how
the models and practices of modern management are changing dramatically. As organizations adopt
more open, atter, exible and collaborative management structures, we look at the role IT is playing in
stimulating and supporting that revolution.
Meanwhile, our Special Report is about the new raw material of innovation: data and, in
particular, the torrent of multi-structured data thats being referred to as big data. With input from
some of the worlds top CIOs on their objectives for big data, several pioneers who are pushing the
technology boundaries with big data initiatives and thought-leaders such as World Wide Web inventor
Tim Berners-Lee, we consider the opportunities for turning big data into big bucks.
We also explore specic cases of innovation by some top technology executives including Wayne
Shurts, CIO of Supervalu, whos deeply engaged in an ambitious turnaround strategy at the $36 billion
grocery group, and Andy Nelson, the UK Government CIO, who is looking to streamline government
IT procurement by establishing a CloudStore where departments go to purchase pre-approved
cloud services. And we report from Tokyo where many of these themes were on the agenda for the
10,000-strong audience of technology and business leaders at Fujitsu Forum 2012 and where
cutting-edge innovations (from cloud integration and big data services to sensor-based IT and
advanced supercomputing) were in the spotlight.
As always, you can nd further discussion of these and other issues at our website, i-cio.com,
where youll get access to video interviews, case studies, CIO appointments news and more. And you
can also follow us on Twitter at @GlobalCIO for regular updates on innovation in all its many forms.

Editor
kenny.maciver@redwoodgroup.net

Fujitsu I Publication is published on behalf of Fujitsu by Redwood, 7 St Martins Place, London, WC2N 4HA.
Tel +44 (0)20 7747 0700, Fax +44 (0)20 7747 0701.
Copyright Redwood Publishing Ltd 2012. All rights reserved.
Reproduction in whole or in part is prohibited without prior permission of the editor.
Email: fujitsu.contactus@redwoodgroup.net. Fujitsu and Redwood Publishing Ltd accept no responsibility
for the views expressed by contributors to the publication.
Fujitsu I Publication cannot take responsibility for unsolicited manuscripts, photographs or illustrations,
or for errors in articles or advertisements in the publication.
Editor: Kenny MacIver. Deputy editor: James Lawrence. Art director: Finnie Finn.
Senior account director: Lisa Marie Mills. Editorial director: Sara Cremer. Creative director: Paul Kurzeja

04 July Sept 2012

Illustrations: Joe McKendry

Contributors

ROBERT SCHMID
CIO, Activision
Barometer, p22

ANDY NELSON
CIO, UK Government
Top of My Agenda, p38

TIM BERNERS-LEE
Director, W3C
Barometer, p22

WAYNE SHURTS
CIO, Supervalu
This Way Up, p47

For many IT leaders, being

CIO at the publisher of some
of the worlds most popular
computer games, such as Call
of Duty and World of Warcraft,
would amount to a dream job.
But this is no cushy role: Robert
Schmid is tackling some serious
challenges that are far tougher
than shooting bad guys from
the future or outwitting dragons.
Activisions games are inherently
social, therefore social
technologies and the vast
amounts of data they enable
the company to collect are
playing a huge role in delivering
enhanced customer satisfaction.
In the Barometer section
of our Special Report on big
analytics, Schmid explains
the way social and big data
two of the megatrends shaping
the future of enterprise IT
are combining to deliver
unprecedented business value.

As the IT chief of a national

government in the midst of an
austerity program, Andy Nelson
has some big targets to meet.
One is to strip 340 million
($530m) of cost out of UK
Government IT procurement by
2015 and a major transition to
cloud computing is helping him
get there. The government
CloudStore, which allows
pre-approved commodity IT
services to be purchased by
public-sector departments on
a pay-as-you-go basis, is a key
element of this, he explains in
this issue of I.
Nelson, who has been CIO
of the UKs Ministry of Justice
since 2009 and added the
UK Government role to his
responsibilities in April this year,
stands out among public-sector
technology leaders, as he has
a background in the private
sector, having previously held
senior IT roles at insurance
group Royal Sun Alliance and
UK supermarket chain Asda.

There is, arguably, no one in

the world better qualied to
contribute to our Special Report
on big data analytics than the
inventor of the World Wide Web
since, these days, Tim BernersLee is campaigning hard for
ubiquitous open data which,
he believes, is essential to ensure
his brainchild realizes its full
potential. And he has a clear
message about data for CIOs.
Restricting what people can
read about your products makes
no business sense. We have to
believe that sharing data brings
real benets, he argues
in this issue of I.
Berners-Lee holds two
professorships, at MIT in the
US and Southampton University
in the UK, is the director of web
standards organization the World
Wide Web Consortium (W3C)
and a director of the World Wide
Web Foundation, which aims to
further the potential of the web
to benet mankind.

The CIO of $36 billion US

grocery group Supervalu has
a clear vision: Business, fast
and simple. And Wayne Shurts
30-year career, which includes
roles in nance, sales, marketing
and IT at both US and UK
companies as well as a
four-year stint running his own
IT start-up has given him the
expertise required to deliver on
that promise. His laser-like focus
on deploying digital technology
to create speedy, positive
business outcomes is enabling
him to rapidly turn around the
disparate, cluttered IT
environment he found when
joining Supervalu in 2010.
One great example of this, he
explains in his interview with I,
was the company-wide adoption
of corporate social networking
tool Yammer. This was a great
project, he enthuses. It was
up and running in no time,
with very little resource needed
from [IT], but its impact has
been huge.

July Sept 2012 05

Global
Intelligence
for the CIO

On the web
For even more insight and analysis for CIOs,
visit i-cio.com. Top stories currently include:

SPECIAL
REPORTS
In-depth analysis
Downloadable reports on the major
CIO agenda items, including: the
design revolution in enterprise IT;
how cloud is enabling business
agility; the switch to mobile rst;
and supporting rapid growth in China.

VIDEO
The need for speed
How are organizations facing up to
the many challenges presented by
the accelerating pace of change?
Featuring interviews with Martin
McCourt, ex-CEO of Dyson, and
other business and IT leaders.

gLObAL CIO
APPOInTmEnTS
New roles for IT leaders
Our regular round-up of the latest
CIO arrivals and departures at the
worlds largest organizations.

I N O U R M E M B E R S A R E A At:

E x c l U S I v E At:

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www.i-cio.com/specialreports

www.i-cio.com/video

www.i-cio.com/features

PlUS Log in to our Members Area for exclusive thought-leadership videos,

CIO Barometer polls and our archive of presentation-ready data.

e v e n t s .

r e s e a r c H .

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July Sept 2012 07

F U J I T S U

F O R U M

2 0 1 2

Reshaping
business

Fujitsu president Masami Yamamoto outlines

a new era of ICT in which technology
innovation will have a transformational
impact on both business and society.

Information and communications technology is poised to

transform business and society in unprecedented ways, enabling the
world to meet head-on many of the challenges it faces from global
economic uncertainty and rising energy costs to localized issues
such a rapidly aging population and disaster planning. That was the
forward-looking message from Fujitsu president and CEO Masami
Yamamoto in his keynote speech at Fujitsu Forum 2012.
Addressing a VIP audience of business and technology leaders
at the global ICT giants annual event in Tokyo, which attracted more
than 10,000 visitors, Yamamoto emphasized this years theme of
Reshaping ICT Reshaping Business when he said: Through the
application of ICT we can help each of your organizations innovate.
Taking an overview of the worlds economy, Yamamoto pointed to
the rise of China and India as one the key factors to which global
businesses like Fujitsu must respond. The major players in the global
economy are changing, he said. We are at a turning point. The US,
European countries and Japan have been leading the economic
markets. But now were seeing the emergence of new markets that
are escalating their position to become world leaders. We need to
understand what we need to do to further globalize.
He referred to some of the other challenges that Japan is facing,
such as an aging population, rising energy prices and a stagnant
economy, and pointed out that other mature markets are having to

08 July Sept 2012

tackle similar diculties. How Japan

responds can be a role model for the rest of
the world, he said. And we believe that ICT
will be key to solving these challenges.
Indeed, digital technology has moved
way beyond being deployed uniquely by
businesses for back-oce eciency, he
stated it has become a major component
of almost every aspect of society. ICT will
continue to advance, leading to future ideas
and new value, he said. Which means that
ICT is now in a position to support business
comprehensively.
Rapidly changing landscape
To reinforce this point, Yamamoto highlighted
the many rapid changes that are currently
under way in the technological arena,
including: the massive increase in computing
power within digital devices; the exponential
growth of cloud computing that will
accelerate a shift from system ownership to
system use; the emergence of ubiquitous,

e v e n T S .

R e S e a R c H .

connected sensors that form the basis of the Internet of Things;

the explosion in social media that is, among other changes, turning
human beings into sensors that gather, record and share data; and
dramatically expanding data volumes that can be leveraged by
organizations to extract huge business value.
How we use this new sophistication of ICT in the business world
is critical, Yamamoto said. And this is what we at Fujitsu believe
reshaping ICT and reshaping business is, in its truest sense, all about.
The business benets that ICT can now bring to the table are many
and varied, Yamamoto explained. It can contribute to innovation, allow
organizations to harness the collective strength of teams, optimize
decision-making through big data analytics and predictions,
accelerate research through the simulation of real-life events using
supercomputers, and overcome geographical restrictions by giving
people the ability to collaborate regardless of time and location.
However, he argued, to achieve all this, businesses need to move
away from the traditional 80/20 budget split, where 80% is spent on
maintenance and 20% on innovation. Ideally, this should be 50/50,
he proposed. Half for maintenance and operations, and half for new
elds and new challenges. Our aim, therefore, is to reduce the cost
of [the former] through modernization and system development.
By doing this, we can help our customers to put more of their money
into innovation.

Expanding on this point later, in an

on-stage conversation with Satoshi Yamanoi,
vice president at research group Gartner,
Yamamoto stressed: CEOs must challenge
themselves to nd new businesses and ideas
and they need to leverage ICT [to do this].
That is why leaders must achieve this 50/50
balance, as ICT is so critical for generating
new value.
This, he continued, is putting CIOs
under increasing pressure. They need to
understand that how they harness ICT will
aect growth. They therefore need a birdseye view of the business, but also a detailed
view of ICT in the eld. They have to shoulder
much more responsibility than ever before.
Meeting customers needs
In order to support CIOs in their quest to
empower business transformation, Fujitsu is
working hard to fully understand the issues
customers face, said Yamamoto. He pointed
to the companys strategy of eld innovation
as evidence of this where engineers work
closely on site with customers in order to rst
understand, and then solve, their problems.
Our people see customers problems with
their own eyes and are in the best position
to understand them, said Yamamoto. We
solve their problems and then bring back
knowledge to the center.
Concurring, Gartners Yamanoi argued
that this bottom-up, eld-oriented approach,
when leveraged on a global scale, gives
Fujitsu a real competitive edge compared
with the classic top-down management
approach typical of Western vendors.
Yamamoto had also referred to this
approach to business innovation and
partnership with customers in his keynote:
We want to support our customers as they
face changes in the business landscape. Its
something thats [encapsulated] in the Fujitsu
brand promise: Shaping tomorrow with you.

Photography: Yasu Nakaoka

BusInesses
need to
Move away
fRoM an Ict
Budget
splIt of
80/20, and
achIeve
a 50/50
Balance of
opeRatIons
and
InnovatIon.

P e O P l e .

July Sept 2012 09

Call to
action

Organizations now expect ICT management to

initiate and deliver major business change.
ICT leaders are now counted on to play a central role in the
transformation of their organizations business models, ensuring that
information technology does not just deliver operational eciency but
makes these organizations more agile, smarter and more competitive.
That new responsibility was spelled out by CIOs and other senior
executives in a wide-ranging line-up of customer keynotes at the
recent Fujitsu Forum 2012 in Tokyo. The speakers from retail,
nancial services, travel and global trading organizations all detailed
how they are applying technology to ensure that their organizations
continue to innovate in a challenging global business environment.
Yasuhiro Suzuki, president and CEO of Seven Net Shopping,
the online arm of Seven & i Holdings, outlined his vision to unify the
real and Internet worlds at the 4.8 trillion ($61bn) Japanese retail
conglomerate, which operates 45,500 outlets in 17 countries.
By combining online and physical stores into one seamless
process for the customer, Seven & i has the opportunity to truly
disrupt the retail industry, he said. Drawing an analogy with how
Apple disrupted the music business by placing the iTunes store at
the center of an ecosystem of music and devices, he explained how
Seven Net will sit at the center of a similar ecosystem of consumer
products and physical stores managed by Seven & i. For example,
customers will be able to collect online purchases in their nearest
bricks-and-mortar store, while oers and childrens entertainment
will be pushed to shoppers mobile devices via free in-store Wi-Fi.
Wrapping around all of this, social commerce is also an
imperative, said Suzuki. There is a big change in how customers are
getting information, he stressed. Retail must therefore adapt quickly
to a world where consumers are increasingly making purchasing
decisions based on friends recommendations and where
companies must listen to feedback obtained via social media in
order to fully understand their customers needs.
Yoshinori Suzuki, senior managing director and CIO at the Tokyo
Stock Exchange, explained how his organization has optimized its ICT
systems in order to meet customer requirements. The main thrust of

10 July Sept 2012

The
mIssIon of
IT people
Is To geT
ever
Closer
To The
busIness
and
generaTe
new
value.

Cultural shift
In a similar vein, Grant Swinbourne, manager
of technology delivery at Australian airline
Qantas, demonstrated how enterprise IT
is making the company smarter, more agile
and more ecient in an extremely tough
business environment. In order to achieve
this, the organization rst had to instill a
cultural change to unify the IT team, with the
shared goal of delivering increased end-user
satisfaction. This was achieved by taking key
IT employees and service partners away
from the oce for a three-day conference,
during which they collectively agreed to a
fundamental shift in the way the business
managed IT.
The IT team was then asked to provide
Qantass 30,000 employees with the
technology and exibility to do their jobs
better. This includes improved collaboration
tools and powerful mobile devices that
speed up aircraft maintenance by allowing
engineers to access complex information

Photos: Yasu Nakaoka

this was its Arrowhead system, delivered

in partnership with Fujitsu, which improved
reliability and cut response times from 10
milliseconds to less than two. This changed
the way traders operate by allowing them to
shift to automated program-based trading,
which is only possible when response times
are so fast. ICT has revolutionized our
business, Suzuki said.
The optimization required to deliver this
was only attainable, Suzuki added, by rst
standardizing the organizations entire
systems. And this, he stressed, is one of the
CIOs key responsibilities, alongside ensuring
the organization has the exibility to adopt
the best available technology appropriate to
the business. We will continue to provide
our customers with innovation and new
business models through our eorts to adopt
ever-changing ICT models, he promised.

e v e n t s .

As well as featuring
keynote speeches
from a wide
range of Fujitsu
customers, Fujitsu
Forum 2012, which
took place at the
Tokyo International
Forum in May,
showcased the
global ICT giants
latest technology
and services. The
two-day conference
and exhibition
was attended
by more than
10,000 people.

r e s e a r c H .

P e o P l e .

and resources without having to leave the aircraft. Were empowering

our people, our customers and our business, said Swinbourne.
Empowering people with the right skills was also on the mind of
Hiroshi Yokotsuka, president of insurance group IT service provider
Tokio Marine Nichido Systems. The evolution of the ICT industry will
have a big impact on demand for skills at all levels of ICT, he argued.
Traditionally our objective was to bring eciency to the back oce,
he said. But the IT role is changing under the inuence of consumer
technologies and cloud. There will be less opportunity for classic
roles, such as software engineers (SE) in enterprise IT departments,
he pointed out, as more software moves to a pay-per-use model.
As a profession, we have to be very responsive, Yokotsuka added.
So the mission of IT people such as SEs is to get ever closer to the
business and apply their innate capability to think structurally in
analyzing the needs of the business side and generating new value.
Relationships with suppliers are also changing, he said. No longer
do we simply ask vendors to undertake specic jobs: we have to work
together, think together, and collaborate as peers and colleagues.
Changing business models
That was a point echoed by Kerry Bailey, SVP and chief marketing
ocer at ICT service company Verizon Enterprise Solutions. We are
seeing dramatic connections being made between ICT and the
business, with business models changing in a very, very signicant
way, he argued. Driving that sea change are cloud and mobility.
Similarly, Verizon is working with Fujitsu to build a truly global IT
infrastructure that supports the worldwide operations of multinational
trading conglomerate Mitsui. Cloud computing is the key enabler of
that, said Haruhiko Kuroda, chief IT architect and deputy general
manager at the rms Information Technology Promotion Division.
Without using cloud, we wont be able to support businesses in
diverse areas around the world or provide secure, reliable access
from all kinds of devices, said Kuroda. Architecturally, that puts the
network at the center of everything.
This has made Mitsuis ICT organization more agile: with one
business initiative last year, it took the group just two months to deliver
a near-complete system by customizing global ERP applications.
With the cloud platform we can provide any number of dierent
applications and so cope with any kind of business requirement
that comes along, said Kuroda.

t he

ne x t

F u j it s u

Fo ru m

l November 7-8, 2012: Fujitsu Forum 2012, Munich, Germany.

For more details and registration see: ts.fujitsu.com/rl/2012

July Sept 2012 11

Essential reading
Global innovation, digital leadership and dealing with rapid change.

THE NEW
TECHNOLOGY
ELITE
How great
companies optimize
both technology
consumption
and production
Vinnie Mirchandani

12 July Sept 2012

Who are the new technology elite? They are no longer just the stars of Silicon Valley
or the digital thought-leaders of the worlds top business schools. According to former
Gartner analyst Vinnie Mirchandani, joining them in recent years have been a new breed
of innovation-driven C-level executives who are at one with the yin and yang of the
consumerization of enterprise technology and (his term) the enterprising of consumer
technology. The elite who grasp what these trends mean to their organizations display a
freshly evolved set of attributes: a passion for product design elegance, the ability to excel
on the global work stage, deep knowledge of the power of social networks, the ability to
build and leverage business ecosystems, and a keen understanding of how to use
technology to inject smart functionality and tech sex appeal into even the most
mundane of products and services.
At the heart of this is Mirchandanis observation that the traditional boundaries between IT
buyer, user and vendor have broken down: when car companies are eectively providers of
mobile computing platforms, phone companies are planning to oer IT-powered payment
services and logistics companies sell themselves on technology rather than transportation
excellence, Mirchandani has a point. Although lacking in cohesion in parts, the book is
packed with case studies and CIO input, and powerfully documents the turning point in
history when IT-enabled innovation and business became indistinguishable and inseparable.

VELOCITY
The seven new
laws for a world
gone digital
Ajaz Ahmed
& Stefan Olander
Founder of creative
agency AKQA and
Nikes VP for digital
on embracing
rapid change.

GROWTH
CHAMPIONS
The battle
for sustained
innovation
leadership
The Growth
Agenda
Case studies from
some of the worlds
most admired
businesses by
a global network
of academics,
consultants and
practitioners.

Photos: pixelate.com

JUGAAD
INNOVATION
Think frugal, be
exible, generate
breakthrough
growth
Navi Radjou,
Jaideep Prabhu
& Simone Ahuja

Kanak Das lives in a remote region of India and rides a bicycle to work. The many
potholes on the road so typical of his country were slowing him down and giving him
back problems. But instead of complaining about what he couldnt change, he invented
a shock absorber that converts the jolts into energy to power his bike. So the bumpier the
road, the faster Das can go. This technology is now inspiring MIT students working on how
to pull o a similar trick in automobiles, and is likely to be integrated into the cars of the future.
The authors hold up this invention as an example of jugaad, a Hindi word for a frugal,
innovative solution to a real-world problem. Developing economies are full of such ingenuity,
and the authors argue Western organizations must learn to think in a similar way and
beyond their billion-dollar R&D labs to survive in a world where competition comes from
all directions and rich economies are having to readjust to the reality of declining wealth.
Books on innovation abound. This one stands out not only because of its original
thinking, but also because of the vast amount of painstaking research behind the dozens
of case studies drawn from both major multinationals and individuals like Das. Whats
more, the authors provide practical advice on how jugaad principles can be integrated
into existing innovation strategies in enterprises, governments and entire nations.
Starting from a pessimistic point of view (as far as the West is concerned), by the end this
inspirational book leaves the reader brimming with hope and excitement for the future.
l To read our 2010 interview with Radjou and Prabhu, go to: tinyurl.com/chdx8wc

e v e n t s .

r e s e a r c H .

p e o p l e .

Whos moving where...

New roles for IT leaders around the world.

52% of CIOs sit on their

organizations operational
board, compared with
just 42% in 2010.
(Harvey Nash CIO Survey 2012)

Scaling new heights

AUSTRALIA
The Australian
Securities Exchange
has recruited Credit
Suisse Canadas head
of IT, Tim Thurman, as
its CIO.
CHINA
Hotel chain 7 Days
Group Holdings has
promoted CIO Yuezhou
Lin to COO.
FRANCE
Gilles de Richemond
has been appointed
director of IT at online
travel agency
Voyages-SNCF.com.
GERMANY
Christoph Kollatz is the
new chief information
and process ocer at
airline Lufthansa
Thomas Pirlein, former
CIO of confectionery
company Lekkerland,
is now the new CIO at
high-street fashion
group Esprit.

INDIA
Arun Gupta has been
appointed CIO at
pharmaceuticals
company Cipla.
SINGAPORE
The managing director
of technology and
products at Australian
telco Optus, Andrew
Buay, has been named
group CIO for its parent
company, SingTel.
SPAIN
Financial services
group Bankia has
appointed Ignacio Cea
as its new director of
technology and
operations.
SWEDEN
Eva Listi is the new
IT COO at PostNord,
the postal services
operator for Sweden
and Denmark.
SWITZERLAND
Andreas Maier is the
new head of IT at

insurance giant Axa

Winterthur David
Mathers, CFO at Credit
Suisse, has now also
taken on the role of CIO.
UK
Craig Macpherson is
the new CIO for UK
and Ireland at global IT
giant Fujitsu Antoine
Shagoury, responsible
for technology at the
London Stock
Exchange Group, has
been appointed as its
group COO Philip
Langsdale, CIO at
airports group BAA,
has moved over to take
the same role at the
UK Governments
Department for
Work and Pensions
InterContinental
Hotels Group has
made Eric Pearson its
CIO Liam Maxwell is
the new deputy CIO of
the UK Government.

USA
The new CIO at Bank
of America is Laurie
Readhead Chocolate
manufacturer The
Hershey Company
has promoted Joseph
Zakutney to VP and
CIO Money transfer
specialist Western
Union has made
David Thompson its
new CIO Agricultural
machinery maker
Deere & Company has
appointed John May
as its CIO Stuart
McGuigan has joined
healthcare giant
Johnson & Johnson
as CIO Fast food
chain Burger King has
hired Kelly Maddern
as CIO The US
Government has
named Todd Park as
its new CTO Randy
Sloan is the new CIO
at Southwest Airlines.

Defensive
positions
l Dietmar Theis has been
promoted to IT director
of the German Army.
l Mike Locatis has become
the new assistant secretary
for cybersecurity and
communications at
the US Department of
Homeland Security.
He was previously CIO at
the Energy Department.
l James Craft, deputy
CIO of the US Marine
Corps, has been appointed
CIO of the Defense
Departments Joint
Improvised Explosive
Device Defeat Organization.

FO R MO N THLY u pDaTe s
O N CI O a pp OI N TMeN T s :

www.i-cio.com/features

July Sept 2012 13

60

50

40

30

20

10

S P E C I A L

R E P O R T

The lure of
big analytics
The prospect
of turning vast
amounts of
multi-structured
data into
business value
is proving
irresistible to
C-level executives.

In this 10-page report:

15 Analysis: Turning big data into big business payback
19 Big data speak: The new vocabulary of business analytics
20 Boardroom View: Rob Jennings of Mamas & Papas
21 Data Feed: The numbers behind the information revolution
22 Barometer: Four IT leaders share their objectives for big data

Words: Kenny MacIver

In this feature

l At eBay, every day, over 50 terabytes of new data transactions,

for-sale item photos, product descriptions and more pour into its
systems. Until recently, the online marketplace had no way of storing
and analyzing such a torrent, so it would typically treat over 90% as
run-o, having to be content with analyzing a sample of a mere 1% to
10%. Not any more. A custom-built big data analytics engine known as
Singularity now allows 150 eBay analysts to run queries against all 40+
petabytes of that multi-structured data, helping it to map highly valuable
online customer behavior and clickstream data.
l Since earlier this year, at UK-based betting and gaming company
Ladbrokes, each one of the bets it takes is immediately fed into one of
the worlds largest active data warehouses. That enables the company
to analyze and adjust prices the odds on a horse, the half-time score
in a soccer match, the result of a general election in real-time, with

Erik Brynjolfsson,
professor of IT and
director of MITs Center
for Digital Business
Reid Homan,
co-founder and
chairman, LinkedIn
Andrew McLaughlin,
former deputy CTO for
the US Government
and now VP at Tumblr
Mike Olson, CEO,
Cloudera
Filippo Passerini,
group president of
global business
services and CIO, P&G
James Perkins, new
data and technology
manager, Shop Direct
Masami Yamamoto,
president and CEO,
Fujitsu

Volume. Velocity. Variety. The three dening features of big data

now present a tantalizing prospect for organizations as more and
more information in all its dierent forms ows into their systems,
or becomes readily available as a service, at ever-faster rates. For some,
exploiting (or even recognizing) that burgeoning asset is still for the
future, but a growing number of companies are showing how extreme
analytics can turn those three Vs of big data into big business value:

July Sept 2012 15

s p e c i a l

r e p o r t

its oor of traders making as many as 100,000 price changes every

minute in the immediate run-up to and during a major event. Making the
right calls on those prices, using a complete set of data, is now regarded
as crucial to the success of the self-proclaimed technology-driven
business, where revenues hit almost 1 billion ($1.6bn) last year.
l At LinkedIn, there is a perpetual investigation into new trends in
careers and jobs worldwide, with its data scientists using the data
exhaust of 161 million members to create products of real value to
subscribers. LinkedIn Skills, for example, exploits the free text on
proles to extract whos expert in what, what skills are hot, the regions
in which they are growing, and so on. The social network uses a
state-of-the-art analytics suite that mixes traditional relational data
warehouse platforms, such as Teradata, with the new breed of big data
technologies tuned to the analysis of unstructured and semi-structured
data namely Hadoop and Voldemort (see Big data speak, page 19)
to spot members evolving behavioral patterns, professional trends,
job turnover rates and even the most over-used buzzwords (extensive
experience and dynamic are currently looking a bit tired).
Those companies are just three among a growing list of
pioneers of big analytics. But they point to where the majority of large
organizations both private and public sector would like to go.
A recent survey of almost 1,500 C-level executives by management
consultancy McKinsey revealed that over half (51%) regarded big data
and analytics as a top 10 digital business priority, with 9% labeling the
area as their current number-one digital priority, ahead of marketing
and social tools, and exible delivery platforms.
Such thinking is based on a realization that while current big data
opportunities are already business critical, the era of big data has
only just begun. Over the next few years, ever-greater volumes will be
available, generated by social media, the Internet of Things, locationbased services, sensors, machine-to-machine communication,
biological devices and scores of other cutting-edge applications.
And CIOs will need a keen understanding of the challenges and
potential business benets that these will usher in above all, the
importance of analytics.
This sea of data does not in itself have intrinsic value; how you
utilize it, how you analyze it and how you apply that analysis to your
business is where the key lies for big data, says Masami Yamamoto,
president and CEO of Japanese ICT giant Fujitsu. By optimizing such
decision-making you can expand your revenue opportunities, look
into the purchase patterns of customers, avoid stock-out situations,
proactively identify operational issues before they become signicant
problems, make the best possible scientic decisions... in other words,
become a lot more competitive.

16 July Sept 2012

Driving all this is the phenomenal

economics of Moores law, and new IT
models such as cloud, which have brought into
reach data analysis that would previously have
been too complex or too costly to contemplate.
The fundamentals that power the ability to
store, process and deliver data just get better
every year: cheaper and cheaper computing
and bandwidth, the availability of cloud
hosting, the abundance of data center
capacity, says Andrew McLaughlin, former
deputy CTO for the US Government and now
VP at blogging platform Tumblr. The ability
to do data-driven analytics, to do big data, is
now within the reach of any business, any
government agency, any non-prot. And if you
are not doing it, you are basically screwing up.
Such perceptions also underscore how far
and fast big analytics has come in the past
18 months: new models and technologies
to support the approach have gone from
experimental and immature to reliable and
powerful. The raft of technologies designed to
handle much more complex, multi-structured
and enormous amounts of data at lightning
speeds ranges from advanced supercomputers
(such as the 11 teraops K Computer) and
in-memory databases (such as SAPs HANA) to
massively parallel systems using a mix of classic
relational database technologies and relatively
new oerings such as Hadoop, MBase,
Cassandra and MapReduce (most of
which were developed to meet the unique
unstructured and semi-structured data
challenges at Facebook, Google and Amazon).
This is not a relational versus post-relational
ght. The co-existence of these worlds is
inevitable, and rms such as Fujitsu, Oracle
and Teradata already provide middleware for
integrating big data systems with Hadoop and
NoSQL, for example. As LinkedIn co-founder
and chairman Reid Homan says: What youll
see within these new kinds of data projects is
not just one source of data, but multiple sources.
A straw poll of this magazines global CIO
readers shows that most have big analytics in

t analyzing big data,

o
n
you
re
ua
are
o
y
f
sc
I
r

p.
u
ng
i
ew

funding that has poured into big data start-ups

from venture capitalists. This year and next
year are going to be really transformative for
the way that data is managed by business,
he says.
Critical to that transformation will be the
ingestion of a lot more data. Some estimates
suggest that today 70% to 80% of enterprise
data does not sit within traditional data
warehouses. And while this amorphous
collection of data was previously either
regarded as too big or too expensive to be a
target for analysis, that is no longer the case.
The constraints are falling away on the use of
information to power your business, says Alys
Woodward, research director for European
business analytics at IDC.
A great example of that is the UK-based
online and home shopping company, Shop
Direct Group, whose brands including
Littlewoods, K&Co, Woolworths.co.uk, Very
and isme generated 1.7 billion ($2.7bn) in
sales last year. The challenge it set itself was
to obtain a single view of its customers, with

their sights. Even though only around 30% are currently engaged in big
data initiatives, for most of the remainder the view is not yet, but soon.
And that gels with wider research by IT industry watcher IDC, which
showed that only a third of European organizations believe they are
ready for big data.
However, such thinking is at very dierent stages in dierent sectors.
The IDC survey highlights how around 40% of nancial services and
retail companies are either ready to exploit big data or have initiatives
underway. And Forrester Research has found that 45% of all current
big data deployments are marketing-related.
That enthusiasm is based on a realization that big analytics is now
within reach. It is not only possible, but it is imperative that institutions
put the power of big data to work, to drive performance, to deliver
better services, to revolutionize the way that they operate, says
McLaughlin, who in an earlier role led global public policy at Google.
That is not a situation lost on CIOs such as Filippo Passerini, group
president of global business services and CIO at consumer packaged
goods giant P&G. The ability to analyze big data is critical to running
the business in real-time, he says. Having access to the right data, at
the right time, and with actionable insights, is a competitive advantage.
This allows us to be more responsive to marketplace changes and
more quickly address the needs of our customers.
The sense of opportunity is also shared by Mike Olson, CEO
of Cloudera, one of the hundreds of companies in receipt of the

real-time linkage to the browser behavior of specic individuals. That

would allow it to directly track and inuence online customer behavior
with the aim of dramatically increasing sales conversion rates by
targeting customers with personalized emails that highlighted the
products they have shown most interest in, as well as personal sale
rails and payment options.
According to James Perkins, Shop Directs new data and technology
manager, that required a new set of tools. While traditional analytical
tools have a very good role in the business, from a targeting perspective
they dont enable us to get down to the individual behavior levels, and
that left us with a great big hole in our view of the data warehouse.
The solution was a data hub based on Celebrus Technologies
Insight Platform, which captures all customer online activity every
single click event, the URL of every page viewed and related data.
That information indicating interest and intent is then integrated with
individual customer data held in Shop Directs core data warehouse
where the customer lives, what they have previously bought, what
credit terms they have used in the past, and so on.
We have replaced non-personalized broadcast email with truly
one-to-one dynamically populated email, says Perkins. The result:
Shop Direct has seen a 28% increase in incremental sales per email
send, with the whole project producing ROI after just seven months.
A not-dissimilar big data analytics use case is underway at Daimler,
where the aim is to exploit machine-to-machine data to improve
vehicle quality and enhance the customer experience as well as
cut Daimlers costs. For the German automotive manufacturer, the
challenge is moving to the use of sensor and telematics data as part
of the lifecycle care of its vehicles.
In 2010 it completed the transition to a central data warehouse that
provides a unied view of all after-sale vehicle data. The Advance
Quality Analysis (AQUA) system enables Daimler to analyze all aspects
of quality, by gathering data from warranty and billing information,
product data and diagnostic data downloaded from the on-board
vehicle systems. That is no small amount given that one of its fully
tted vehicles today runs 19 dierent control units eectively
minicomputers with over a terabyte of data streaming between them.
Over 2011-12, the company has extended that to the analysis of
how individual customers drive their vehicles and the load that puts
on various components (using aggregated data to safeguard individual
privacy). Today a lot of that kind of data from a vehicle is downloaded
when it is taken for a service: but in the future, Daimler plans to enable
bi-directional communication with the vehicle, collecting data directly
from it and sending it maintenance information such as software
updates and messages. The prospect would be the ability to remotely
run quality checks, give real-time warnings of any issues, optimize
maintenance planning and minimize recalls.

18 July Sept 2012

The value of daimlers plans is pretty

transparent. But, in case CIOs are in any
doubt, some recent research presents some
hard evidence of the value of analytics: there
is a direct correlation between business
performance and analytics-driven management.
According to MIT Sloan Management Review,
the top performing organizations use analytics
ve times more than lower performing ones.
There is a fundamental change underway
in the way that companies make decisions.
Instead of relying on a leaders gut instincts,
an increasing number of companies are
embracing data-based analytics, comments
Erik Brynjolfsson, IT professor and director of
MITs Center for Digital Business. This big
data revolution is occurring mainly because
technology enables rms to gather extremely
detailed information from, and propagate
knowledge to, their consumers, suppliers,
partners and competitors. We are in the midst
of a revolution in measurement that is aecting
management, business and economies.
His empirical research shows that
data-driven businesses are on average 4%
more productive and 6% more protable.
Furthermore, his research also found
a relationship between this and other
performance measures such as asset
utilization, return on equity and market value.
The sense is that the business world is
at another inection point, where predictive
analytical capabilities will be key for the
prosperity of organizations. As IDCs Alys
Woodward dares to ask: What could you
do if all the limitations on the volume, velocity
and variety of the data we can ingest, store,
process and present were removed?
And CIOs need to have an answer to that
question if their increasingly analytics-hungry
colleagues foresee that situation. As Reid
Homan of LinkedIn concludes: Data is
Web 3.0, it is transforming the world. Whatever
industry you are in, you should have a data
strategy and understand how to think about
data and why it is so important.

Reid Homan and Andrew McLaughlin were speaking at Silicon Valley Comes to the UK; James Perkins of Shop Direct was speaking at Teradata Universe.

Data is Web 3.0. Whatever industry you are in, have a data strategy.

Big data speak

The new vocabulary behind the
revolution in business analytics.
NOSQL
The broad class of database management
systems (DBMS) particularly suited to the
storing and processing of semi-structured or
unstructured data at very high speed often
dealing with huge quantities of data that
traditional relational DBMS solutions cannot
readily cope with. Largely open source, NoSQL
oerings disregard the industry-standard
structured query language (SQL) used in
relational databases, and several tenets of the
classic RDBMS model, notably the ACID test (of
atomicity, consistency, isolation and durability),
the set of properties that guarantees that
database transactions are processed reliably.
Rather, to support extreme parallel processing,
NoSQL databases apply the principle of
eventual consistency. With data partitioned
and processed across multiple low-cost nodes,
consistency is only guaranteed when all updates
are eventually propagated across the system.
Key software options include: HBase, Voldemort,
MongoDB and Cassandra.
hadOOp
Apache Hadoop is a software suite that enables
the distributed processing of large data sets
across clusters of commodity computers.
Derived from the Google File System, it
implements a computational paradigm known as
MapReduce, where the application is divided into
many small fragments of work, each of which
may be executed on any node in the cluster. It
provides a distributed le system (HDFS) that
stores data on the compute nodes, providing
very high aggregate bandwidth across the cluster
of servers. Both MapReduce and the HDFS are
designed so that node failures are automatically
handled by the system. Hadoop is not universally
accepted as a direct substitute for a database
engine it stores data in les but does not index
them. But it is a highly eective pre-processing
tool for ingesting/transforming data. Hadoops
users include JPMorgan Chase, Pearson, AOL,
Nokia, eBay and Fox Audience Network.

caSSaNdra
The Apache Cassandra NoSQL distributed
DBMS combines exibility, scalability and
performance, working as both a real-time
operational data store for online transactional
applications and a read-intensive database for
large-scale BI systems. Originally developed at
Facebook and released to open source in 2008,
it excels in scaling horizontally across commodity
servers. Users talk of near-linear performance
increases as nodes are dynamically added to the
cluster; and as data is automatically partitioned
across all nodes, the system can tolerate a high
level of failure and can readily be deployed
across multiple data centers. Cassandra is
implemented at companies such as Netix,
Adobe, Twitter, Rakuten, Spotify and Pitney Bowes.
map reduce
A programming model and software framework,
originally developed by Google, for writing
applications that rapidly process vast amounts
of data in parallel on large clusters of compute
nodes, taking a simple functional programming
operation and applying it, in parallel, to gigabytes
or terabytes of data.
r prOgrammiNg LaNguage
R is an open source language and environment
for statistical computing, data mining and the
generation of related high-quality graphics. Its
often referred to as the tool of choice by many
of the new breed of data scientists: as one
Googler recently put it, its hard to overvalue R.
Enterprise users include Nationwide Insurance
(USA), Salzgitter Mannesmann Forschung,
Adobe/Omniture, Deloitte, Merck and Pzer.
iN-memOrY daTaBaSeS
High-performance database appliances (for
example, SAPs HANA solution) where the data
being analyzed is held directly in system memory,
enabling the CPU to access and process it
instantaneously rather than having to fetch it
from a disk drive.

s p e c i a l

r e p o r t

Boardroom View
Insight into purchasing patterns across all
channels is critical to maximizing customer
value, says Mamas & Papas Rob Jennings.

rob Jennings
is ecommerce
director at Mamas
& Papas, the
UK-headquartered
upmarket nursery
goods company,
which boasted
annual revenues
of 135.2 million
($212.2m) in
2011-12. With
eight years in
management
at the vendor of
high-quality baby
buggies, nursery
furniture, clothes
and toys, he was
made a board
member in
January 2012.

20 July Sept 2012

We are faced with an entirely new challenge in terms of

how we structure and maximize the use of our customer data.
With over 60 retail stores, an online operation and wholesale
outlets through the likes of Amazon and Tesco plus mobile
Internet opportunities and social media our channels are
growing rapidly along with our data volumes.
In the past, our approach was based on assumptions:
we were having one conversation with all of our customers
whether they were a few months pregnant or looking for a
toddler car seat for their second child. It was clear that we
needed to get a deeper understanding of our customers.
Working with data insight company Experian, we pulled
together all of this disparate data into a central analytical
tool, so now we can analyze, segment and track customer
transactions through whichever channel they choose to use.
We know what our customers are going to need and when, so
theres a dened path theyre going to follow, but this only oers a
short window of opportunity. Therefore its vital that we have the ability to
identify the key customer touchpoints, build an accurate picture of every
customer and understand their purchasing behaviors and segment.
We can now pretty much map our entire product sale alongside a
mothers gestation period and all of the stages after the baby is born.
We know what our average customer is going to need at a certain point
in that journey, and so we pre-empt this by contacting them a week or so
beforehand with a message, Have you thought about buying this?.
Some of the discoveries we have made from mining the data have
been fascinating. For example, we have found that customers who opt in
to marketing communications are worth 50% more than those who do
not, and that those who let us know their childs due date tend to spend
around 130% more than those who have simply opted in. Women
who buy maternity wear from us and supply their due date can spend
anywhere up to 200% more so we use this knowledge to inform our
in-store promotions and incentivize sta, with much of this eort geared
to drawing our customer in at the maternity-wear stage of her journey.
We have moved very quickly from storing simple transactional data
to highly complex, multi-faceted information, and our storage need has
grown by 1,000% over the past year. Big data is a critical challenge for

We can pretty
much map our entire
product sale alongside
a mothers gestation
period and all of the
stages after the
baby is born.

us as we bring new channels into

the mix, including social media
sites such as Facebook, Twitter
and Pinterest, mobile, apps and
tablet sales [20% of website
visitors already access the
Mamas & Papas site via mobile].
Were not quite there yet,
but if, say, someone shares their
Facebook timeline with us, we can
then access a huge amount of very
relevant data. What we will never do
is allow the proliferation of channels
to make our customer experience
too channel centric. Our biggest
loyalty tool is making life simpler for
customers, and my job is to let the
data facilitate a warm, personal and
easy experience for them, however
they choose to shop with us.

Big Data: Big NumBers

50 times

Amount that data

volumes within enterprise data centers
will grow over the next decade. (IDC)

70%-80%

Quantity of
enterprises data residing outside of
traditional data warehouses. (Teradata)

640tB Amount of operational

data a four-engine Boeing 747
generates in one Atlantic crossing.

Data feed

(The Economist)

Big data analytics:

The journey to value

51% Percentage of C-level

executives who say big data and
analytics is a top 10 digital priority.
(McKinsey Global Institute)

Big Data: Hot sectors

85% Proportion of Fortune 500

Which industries have the greatest potential to capture the value of big data?

organizations that will fail to eectively

exploit big data for competitive
advantage over the next three years.

(US economy)

Size of bubble indicates relative contribution to US GDP

High
utilities
Natural resources

Healthcare
providers

computers & other electronic products

45% Percentage of organizations

Big Data: ease oF capture

manufacturing
Finance &
insurance

33% Number of US organizations

real estate
management of companies

accommodation & food

Construction

that distinguish big data from data

and use distinct tools and approaches
to analyze the associated higher
volumes and greater complexity.

Wholesale trade

administrative services

big data initiatives that are currently

focused on marketing. (Forrester)

transportation & warehousing

professional services

retail trade

(Information Week US Big Data Survey)

other services
educational services

60% Percentage of organizations

government

arts & entertainment

low

(Gartner)

information

Big Data: Value poteNtial

High

that say they are likely to invest in big

data solutions during the next year.

Source: McKinsey Global Institute (with data from US Bureau of Labor Statistics)

(Information Week US Big Data Survey)

BooKs & WHite papers

1st The position of analytics and

BI in CIOs technology priority lists.

l Planning for Big Data: A CIOs handbook to the changing data landscape
by Edd Dumbill (free OReilly Strata ebook)
l What is Data Science?: The future belongs to the companies and people
that turn data into products by Mike Loukides (free OReilly Strata ebook)
l Race Against the Machine by Erik Brynjolfsson and Andrew McAfee
l Big Data: The next frontier for innovation, competition, and productivity
(McKinsey Global Institute report) tinyurl.com/74tdfdv
l Linked Data: Connecting and exploiting big data (Fujitsu white paper) tinyurl.com/7aauxen

Not even the low-hanging fruit has been

picked yet. We simply havent been able to get
to it before. Mike Olson, CEO, Cloudera, on big data opportunities

(Gartner 2012 CIO survey)

50%-60% Amount supply

will fall short of demand in the US
economy by 2018 for people with
the deep analytical skills needed
for big data. (McKinsey Global Institute)

1.5 million Number of

managers and analysts needed
in the US by 2018 who have a sharp
understanding of how big data can
be applied. (McKinsey Global Institute)

aDaM
GaDE

CIO, Maersk Line

Barometer
Exclusive: IT leaders on the issues that matter

What are your objectives for big data?

TIM
BERnERS-LEE

22 July Sept 2012

Inventor of the
World Wide Web
and director of
the W3C
International governing
body of the web
CIOs are split on the idea of opening up their
vast amounts of internal data to consumers and
partners. On the one hand they are saying they
should not be giving out detailed data about
things like products; and on the other hand,
they are paying out millions to share as much
data as possible about products so consumers
or potential partners can nd and buy them.
Restricting what people can read about your
products makes no business sense. We have to
understand that sharing data brings real benets.
I think the principle of progressive competitive
disclosure applies here: the more information
you are prepared to share with customers or
suppliers, the more likely it is they will deal with
you. And that is starting to happen in data.
Look at the example of Best Buy. Theyre now
using RDFa [Resource Description Framework
in Attributes, the W3C-developed semantic web
standard for embedding rich metadata in web
documents] so a customer or partner can go
to any Best Buy product page online and slurp
up all the embedded data about it. Best Buy
channels can pull in data about whos selling
what products all over the Best Buy network.
At the moment there is a big open data push
by some governments but its not just about
transparency: open data is about economic
benets. For example, if I want to travel across
Europe by public transportation, surely all the
bus, ferry and train schedules I need from all the
transportation companies should be available.
The only way that can happen is if governments
at a European level require those companies to
publish their data.

Danish shipping
business operating
more than 600 vessels
and 3.8m containers
around the world
Maersk Line is a network business, but
one operating in an industry that is immature
when it comes to deploying technology. We
are presented with a fantastic opportunity,
because shipping, after all, is an optimization
business. We need to optimize our networks,
our container ows, our yields everything
around our business. And until a few years ago,
we hadnt spent a lot of time trying to do that.
Maersk Line needs an improvement engine
and that engine is the capability to embrace big
data and work out how we can use it to optimize
our business. We may be one global network

Maersk Line needs an

improvement engine,
and that is the capability
to embrace big data.
company, but we have a hugely complex IT
landscape, with diverse solutions and data
silos across regions, functions and projects.
During the past three years we have begun
to correct all of that. It is a strategy that calls
for a high level of data integration providing
the ability to share, analyze and optimize data
across the company and a high level of
business process standardization. We now
have a business intelligence (BI) vision: a data
foundation that is the single source of the truth.
For example, we operate 200,000
refrigerated containers around the world. As
part of our Remote Container Management
project, we can give customers access via
our data warehouse to data relevant to these
containers. This allows them to, say, vary the
temperature inside while the cargo is in transit.
So if a consignment of ripening fruit is on its
way to St. Petersburg from South America and
the customer decides to discharge it early in
Rotterdam, they can re-set the temperature
remotely so the cargo is mature when it arrives
in Rotterdam. In such situations, IT is being
proactive and partnering with the business in
a collective way, with commitment made at the
highest levels of the organization. Thats the
engine thats going to drive improvement for us.

s p e c i a l

ROBERT
SCHMID

CIO, Activision

Illustrations: Joe McKendry. Tim Berners-Lee and Adam Gade were speaking at Teradata Universe;
Dr. David Stephenson was speaking at Big Data Innovation.

Online ads business

serving 1,000+ cities
At eBay, we are pushing the boundaries of
big data, having developed systems and tools to
handle what are unbelievable amounts of data.
Even a year ago, we were taking in 50 terabytes
(TB) a day, and processing over 100 petabytes
(PB). One of our systems alone, Vivaldi,
touches about one terabyte every second.
For our big data needs, we have a multi-PB
Teradata enterprise data warehouse. It is
blindingly fast on structured SQL and provides
great concurrency, but it is not inexpensive and
meets just a portion of our analytical needs.
What we were missing was exibility when
dealing with semi- or unstructured data and
the power to run complex algorithms.
The cost meant that, until recently, we were not
able to keep all of the information wed like to. We
would sample 1% to 10% of the 50TB coming
through our systems daily and throw away the
rest. As an Internet company dependent on data,
we simply hated throwing any of it away.
The challenge is that we have got hundreds
of trillions of user behavioral patterns and
clickstream data were trying to keep and
analyze. So that led us to develop a system that
projects structure onto this kind of unstructured
data at run-time. Not an easy thing to do.
The Singularity project, as we call it, has
given us the exibility to query semi-structured
data in a relatively low-cost way (it runs on
commodity hardware) and to scale up from
roughly a half dozen PB of retained data to
nearly ten times that amount so we are now
able to store and analyze all of our usage data.
The type of query we might ask of that
semi-structured data is, What were the top
items displayed on the site on a given day?
This might look at 5 billion page views,
40 billion page impressions, with 135 million
unique items appearing, and generate an
answer in an unbelievable 30 seconds.

Our games are intrinsically very social:

you talk, you interact with other gamers, and
you even connect with us socially for customer
service. But that means one of our big
challenges is unstructured data. What we
found is that when we take unstructured big
data [from Activision social apps, Twitter,
Facebook, email, etc] and try to turn it into
structured data for reporting, a lot of data
quality issues arise. That data is changing in
real-time, and by the time you squeeze this into
the structured model it breaks on a regular
basis. So we nd ourselves now with a data
mart thats structured, that needs to be tuned,
adjusted and worked on very frequently.
We really want to understand what the
gamer does and how they are playing our
games, and integrate that big data with the
structured data, like their name, in order to
make their experience better so we can
understand how best to improve our games.
We even use it to nd people cheating in
competitions. The trick is to be able to make
use of that data in real time, not tomorrow or

Is big data
already generating
signicant
value for your
organization?

Even as the variety, velocity and

volume of the data organizations
want to analyze explodes, the
majority of global CIOs are still
not in a position to exploit it.
Poll of 26 CIOs and IT directors
worldwide conducted by I, June 2012

The trick is to be able

to make use of that data
in real-time, not
tomorrow or the day after.
the day after. Waiting for 24 hours to nd out
if someone cheated while playing Call of Duty
is too late. Waiting for 24 hours to respond to
someone who is not enjoying Skylanders
because they are using the wrong mode
isnt going to help them and they might be
gone by then. But merging structured and
unstructured data, getting insight on such
huge volumes and then serving it up in
real-time is super dicult. It takes people
who really know about the analytics, that really
know how to dig the data. We have a whole
group of PhDs who do nothing else but that.
They are very analytical, very statistical and
very smart people real data nerds. l

72% no

Head of business
analytics, eBay
Classieds Group

Verdict

28% yes

DR. DavID
STEpHEnSOn

Worlds largest online

games publisher with
revenues of $4.8 billion

r e p o r t

July Sept 2012 23

w
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Business school academics who study
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e
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est g ma
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d
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appreciation that the world has changed

and that GE needs to change with it.

That happened with Jack Welch who,
in the 1990s, put quality and process
excellence at the center of the companys
business strategy through the application of
principles such as Work-out and Six Sigma.
When Je Immelt took over from Welch just
over a decade ago, there was once again

Reverse gear
GEs healthcare division is renowned globally for its highly sophisticated
and expensive diagnostic equipment: X-ray machines that might
cost $1 million, ultrasound machines that sell for around $350,000,
electrocardiogram (ECG) units that might come in at $10,000.
Of course, in developing countries there is a small proportion of hospitals
that can aord to buy that kind of equipment, but for most it is simply out

of their reach. In 2007, that gave GE and

Govindarajan the chance to test reverse
innovation for real. GE Healthcare established
an innovation team in India, with funding
of $500,000, that set out to create an ECG
machine targeted wholly at the sub-continents
requirements. The MAC 400, as it was known,
was a light, portable machine, not much
bigger than a desk phone, that could be
taken in an ambulance or even on the back
of a bicycle to wherever patients needed
diagnostic treatment.
That innovation on ECG machines has
not stopped, and by 2011 GE was not only
selling a $500 ECG unit in India, but also
realizing the opportunity of taking such
innovation globally. MAC ECG machines
are now sold in over 90 countries worldwide,
including the US, where GE has targeted what
is a new segment for the company rural
clinics, visiting nurses and doctors in sole
or small practices.
The MAC is just one of the reverse
innovation success stories currently emerging.
Procter & Gamble has had similar results with
feminine hygiene products initially developed
and distributed in Mexico. PepsiCos Frito-Lay
unit is taking snacks and cooking-oil products
developed in India to the global marketplace.
And Deere & Co is doing reverse innovation
with tractor technology conceived in India.
This is a new game multinationals have to
learn to play, says Govindarajan, whose book,
Reverse Innovation, co-written with fellow Tuck
academic Chris Trimble, has been praised
by scores of Global 500 CEOs. Western
multinationals need to cast aside their past
success based on rich-world customers,
and adopt a new mindset.
Moreover, reverse innovation should
not simply be viewed as product innovation.
We have to think of it as business model
innovation, he says. Process is important,
location is important, go-to-market strategy

Grooming: Victoria Porter. Globes from www.justglobes.co.uk

a mandate to change the way the business worked with the focus this
time shifting rmly to the need for company-wide innovation.
What Immelt sensed, though, was that the economics of innovation were
changing fast, inuenced by the march of globalization and the rapid growth
of new forces such as China, India and Brazil. He decided that if GE was to
take advantage of those new dynamics, it needed a greater understanding
of them. Thats when Vijay Govindarajan got the call.
Professor of international business at the Tuck School of Business in
New Hampshire, best-selling business author and widely regarded as one
of the worlds leading experts on strategy and innovation, Govindarajan
was appointed by Immelt as GEs rst professor in residence and its chief
innovation consultant. What he uncovered over the subsequent two years
has since redrawn how GE and a growing number of other multinational
organizations including PepsiCo, Procter & Gamble, Deere & Co and
Unilever thinks about innovation.
Govindarajan was initially asked by Immelt to focus on what GE could do to
accelerate growth in the booming markets of India and China. And for good
reason. GE, just like every other Western multinational, was essentially selling
into these markets products that were developed in the West, only with a few
modications to get them to lower price-points, Govindarajan observes.
Given those markets are growing at an astonishing 7% to 10%, that would
appear a sound strategy. But while there is certainly a segment of those huge
populations maybe 10% to 20% that can aord to buy such products,
the question Govindarajan dared to ask was: How could GE nd a model
that would allow it to engage with the rest of the population? I discussed with
Je Immelt that there is a huge opportunity to unlock the remaining 80% of
the market, by innovating in those countries and for those countries, creating
products, processes and price-points attuned to local conditions, he says.
But the real leap in thinking and the one that will arguably have greater
impact over coming decades involved the acceptance of a second step
centered on the prospect of bringing many of those innovations to the West.
It was a light-bulb moment for us all, says Govindarajan, and one that gave
birth to a new concept in global economics: reverse innovation. Since
then, reverse innovation has become, in Immelts words, a strategic priority
for GE and, indeed, no hollow priority: the contra-ow of innovation has
already started to happen.

i n t e r v i e w

is important, commercial innovations are important. Every aspect of the

business model can be innovated.
With some immediate considerations in mind, he continues: The reality
today is that the developed world has either at or very slow growth and
the growth has shifted to developing economies. Therefore most Western
multinationals need to focus on growth where it exists in emerging
markets. The key for them now is to be just as curious about the problems,
aspirations and demands of poor customers as they have been historically
curious about the needs of rich customers.

Pressure to change
Of course, companies operating in such
countries could have been spurred into a new
logic for localized innovation much earlier
India and China have been targeted economies
for over two decades. The reason that reverse
innovation is now an imperative is that Western
businesses are facing a new set of challengers.
It is only recently that local companies in
these countries have become extremely
strong, says Govindarajan. Earlier,
multinationals could ignore these segments
and markets and still be OK. But no longer,
because customers in poor countries are not
going to wait patiently to become rich so they
can buy your products. Local companies in
these countries will nd a way to innovate for
them. And once they do, they would love to
bring those innovations into rich countries
and disrupt multinationals home territories.
The stakes are that high. Western
multinationals not only have to innovate within
those emerging markets and give customers
the products and services they want, but, as
they are dealing with a potentially extended
period of economic stagnation at home, they
need to win there to show any signicant growth.
So reverse innovation is not optional. It
is oxygen, says Govindarajan. The fuel for

Absence of curiosity
One of Govindarajans favorite stories on glocalization as he, Immelt
and others call the process of adapting rich-country products for global
distribution details the entry of a major US carmaker into the newly
liberalized Indian consumer market of the early 1990s. The manufacturer
picked a best-selling model from its domestic market for the job, but to get
the $20,000 vehicle to a price where it was aordable by even the richest
5% of Indian society, its designers in Detroit were tasked with removing
$5,000 worth of the more luxurious features.
So rather than oering power windows on all four doors, for example, the
Indian version only had them in the front. The same could also be applied to
audio speakers and air-conditioning fans. But it was only when the car hit
the Indian market that the chief aw in the logic became apparent. Anyone
who could aord a $15,000 car in India would naturally have a full-time
driver a driver who would nd himself enjoying all of the front-seat extras,
while the owner suered in the back seat.
The point is that glocalization does not always pay o, and in
developing countries it only works with the richer segments of society
and sometimes not even then. That should send CXOs to their desk
globes, says Govindarajan. They need to take a map of the world and ask
themselves: Where are our future opportunities? They should put a pin on
all the geographies where those future opportunities are strongest. Then
they need to take a dierent colored pin and mark the location of their key
decision-makers, where all the key resources are currently located, where
all the innovation takes place.
What that exercise increasingly shows is that there is a big mismatch
between where resources reside and where future opportunities exist. This
is the gap that senior executives can correct, shifting the center of gravity of
resources, of people and power to emerging markets, he suggests. You
cannot innovate in emerging markets unless you localize with local
resources and locally empowered decision-making.
But that requires courage, he adds. Je Immelt, for example, has actively
committed resources to places where there are possibilities for innovation
from Bangalore in India to Wuxi in China.

seon isl.
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July Sept 2012 27

i n t e r v i e w

future growth in America, in Europe, in Japan. That points to some parallels

from the past, notably in the 1970s and 1980s when Japans automakers
disrupted the then-dominant US car industry. That will be nothing compared
with what will come from innovation in India and China, because the price
points are going to be dramatically lower, he predicts.
New mindset
Given such a situation, it is perhaps surprising to see so few reverse innovation
epiphanies at Western multinationals at least so far. Most have not yet got
it, says Govindarajan. Thats partly because of their historical success, which
means most of the power base, the resources, the dominant logic, is really still
focused on rich-world customers and rich-world business models.
This is the biggest barrier companies have to overcome, he says. With
reverse innovation, the problem is not technological; its not money. It is
the organizational mindset. So Western multinationals have to change and
introduce new logic into the system, in addition to, and co-existing with,
their historically dominant approaches to developed markets.
So where should reverse innovation be applied, and should companies
embrace it universally or adopt it selectively and progressively? At this stage
half a dozen to a dozen countries should be viewed as strategic, says
Govindarajan, though these may dier across companies and industries.
Certainly, India and China will be on everyones list, as would Brazil and
Russia, but Id also include countries like Indonesia, Vietnam and Mexico.
And some sectors are more ripe for its application than others. We are
going to see more and more of this in health care, energy, transportation and
education, he says. But ultimately every sector of the economy is going to be
aected. The reason is simple. Europe grew in the 19th century through the
industrial revolution, a revolution that didnt touch India or China. America
grew in the 20th century through technology revolutions, the services
revolution, the information revolution. Those didnt really touch India or China.
These countries are now catching up in just about every sector, but (here
is the big dierence) they will solve their problems using todays technologies.
A hundred years ago the mass transportation problem in the US was solved by
Henry Ford creating the Model T, the $600 car. Today there is a transportation
problem in India, and Tata Motors is creating the $2,000 Nano. It is based on
2012 technology, whereas Henry Ford was tackling the transportation problem
of America using the technology of the early 20th century. Therefore, even
though the problems that have to be solved in these countries are similar, the
technologies and the context in which you are solving them is so dramatically
dierent. That is the kind of breakthrough innovation were going to nd in
developing countries. And they will redene lives in rich countries. l
l Reverse Innovation: Create far from home, win everywhere by
Vijay Govindarajan and Chris Trimble is published by HBR Press.

28 July Sept 2012

gh
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hR gOES
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July Sept 2012 29

Mobile payMents gain traction in West

The ecosystems required for smartphone-enabled
transactions are nally emerging in the US and Europe.
Mobile payments are predicted to rise globally by more than 60% to $172 billion this year (with
212 million users), and to $617 billion by 2016, according to analyst rm Gartner. Since the use of
m-payments is already common in many developed Asian countries and the developing world for
example, NTT DOCOMOs Osaifu-Keitai (wallet mobile) in Japan and the M-Pesa mobile money transfer
system in Kenya a large part of this growth will come from Western economies. Near eld communication
(NFC) technology is expected to gain more traction, and analyst Jupiter predicts one in four consumers in
the US and Western Europe will use NFC-enabled smartphone handsets to buy goods by 2017. But who
will dominate this space? And will a global standard emerge? Here are some contenders

l The web giant: Google Wallet The

Internet giant launched its mobile payment
system in the US last year, using NFC
technology to allow people to swipe or tap
phones against MasterCard PayPass readers
to pay for goods and redeem vouchers with
its NFC-enabled Android smartphone. There
are scanners in more than 100,000 retail
outlets but take-up has been slow, partly
because Google partnered exclusively with
Citibank, MasterCard and mobile operator
Sprint, limiting the number of compatible
cards and smartphones. Google Wallet has
also been the subject of security concerns.

l The mobile operators: Isis Three of

the four major US mobile operators AT&T,
Verizon and T-Mobile have set up a digital
wallet joint venture called Isis, due to be tested
in two US cities from the middle of 2012.
Like Google Wallet, Isis is powered by NFC
technology, allowing people to wave their
phones at point-of-sale readers to make a
payment. The potential advantage Isis will
have over Google is being able to oer a
wider choice of card providers, banks, mobile
networks and handsets. In the UK, meanwhile,
mobile operator O2, owned by Telefnica, has
launched its own digital wallet service.

l The payment company: PayPal

With some industry experts expressing
doubt over whether NFC technology will
win the mobile payment battle, eBay-owned
PayPal is experimenting with a non-NFC app
called PayPal inStore, currently available in
the US and UK on iOS and Android devices.
The customer enters a 4-digit PIN code in the
app and then shows the on-screen barcode
to the cashier, with payment then taken from
their PayPal account. The app automatically
stores several payment transaction codes for
oine use if there is no mobile network or
Wi-Fi coverage.
30 July Sept 2012

l The start-up: Square Twitter founder

Jack Dorsey is a co-founder of Square,
which combines a mobile app with a small
card-reading attachment that ts into the
headphone jack of cellphones. Pitched as
a possible alternative to NFC technology,
Square allows consumers and business
owners to swipe credit cards through the
attachment to accept payments. Although
tiny compared with the big card companies,
Square is growing fast, enabling more than
$5 billion worth of transactions a year.

$$$$$
$$$$$
$$$$$
$$$$$
$$$$$
$$$$$
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$$$$$

l The card providers: Visa,

MasterCard and American Express
At the London 2012 Olympics an NFCenabled Visa payWave Samsung Galaxy
S3 smartphone will be given to sponsored
athletes to use on the O2 mobile network
at thousands of retail locations. MasterCard
has a similar technology, PayPass, linked
with Google Wallet. Both Visa payWave
and MasterCard PayPass have also been
licensed to the US mobile operator joint
venture Isis. Meanwhile, AmEx has Serve,
a PayPal-like app that transfers money,
pays bills and enables purchases from
a desktop, mobile or Facebook account.
l The tech companies: Apple and
Amazon Apple holds 400 million
customer accounts through its iTunes
store, while online retailer Amazon holds
152 million. Both brands enjoy high levels
of consumer trust, so it wouldnt be a
huge step for either to move into mobile
payments particularly Apple with its large
mobile presence. Its Passbook app, which
stores electronic tickets and vouchers, is
believed to be a rst step towards this. If, as
is rumored, the next version of the iPhone
has built-in NFC technology, the app
could seamlessly combine with this to turn
the device into a mobile wallet, and this
would be a major boost to the mainstream
adoption of m-payment technology.

i n n o v a t i o n

thin client
latency
breakthrough
Super-fast tech
boosts response
times by 90%.

raising the bar for cios

Pressure is mounting on IT leaders to
deliver more business value than ever.

Pole vault illustration: Michael Kirkham

Organizations are facing challenging times, but economic gloom could

present an opportunity for forward-thinking CIOs to reposition themselves as
business leaders. Thats the conclusion of a recent global survey of CEOs by
analyst rm Gartner, which found that although 85% expect a recession to
aect their businesses in 2012, a ratio of two to one will continue to invest in IT.
Those CIOs who successfully make the transition from legacy IT support
to trusted business advisor could enable their organizations to improve
performance and increase revenue, according to Leigh McMullen, research
director of Gartners US CIO research team. However, a change of focus from
back-oce systems to front-oce performance is required, he says: If CIOs
move to a more services-based model, theyre able to tie those services to
business outcomes and, as a consequence, demonstrate increased value.
McMullen adds that much of the technology spend will come from the
CMOs oce. Therefore, it is vital that CIOs think about revenue generation
and determine new ways of engaging with marketing and sales to improve
the enterprises marketplace performance. If youre a CIO and dont know
who the top 20 salespeople in your company are, youre never going to come
up with a solution that will help power or transform the enterprise, he says.
However, CIOs are rarely identied as leaders of innovation. Around a third
of CEOs surveyed said they themselves were directly responsible for innovation
management, with few attributing responsibility to CIOs. The research also
showed that most CEOs still regard CIOs as itinerant specialists.
But its interesting to look at it from the CEO perspective what do they
expect from their CIOs? says McMullen. A lot of the time the specics vary,
but CEOs tell us they want a genuine technology advisor. They want someone
who can help crystallize the business strategy and help inculcate, at operating
committee level, how technology can help the enterprise compete.

D ata
feeD
In a global survey of
C-level executives
by management
consultant McKinsey:
l The majority say the
key trends in digital
business digital
and social marketing
(68%), big data (65%),
and exible delivery
platforms such as
cloud and mobile
(56%) are strategic
priorities for their
companies
l One-third expect
digital business to
increase operating
income by more than
10% over the next
three years
l Nearly half say their
rms investments in
digital initiatives are
too small to deliver
on their goals.
Read the full report at:
tinyurl.com/7easpq8

Despite the undisputed benets

of thin client solutions, high latency
and data loss can be an issue. This is
particularly the case with video and
graphics-heavy applications, or on
low-quality or mobile networks, and
poses a challenge to the adoption of
cloud-based services by organizations
running global operations.
Attacking this problem, global
ICT vendor Fujitsu has developed
technology that slashes latency
and boosts response times for
virtual desktop applications by up
to 90%, even in low-quality network
environments. It works by reducing
the amount of data transmitted and
using graphics processor unit (GPU)
virtualization to spread the load of
graphics-intensive tasks.
The new high-speed technology
will enable dispersed design teams to
collaborate securely, while also paving
the way for new thin client applications
such as video-based distance
training, remote operation of internal
applications using mobile tablet devices
and interactive product demonstrations
at customer locations.
The innovation is slated for
commercial release in the next six to
nine months, initially as part of Fujitsus
Engineering Cloud, which targets the
manufacturing sector.

July Sept 2012

31

NEW YORK CITY

LONDON

There are several noteworthy US tech hubs

outside of Silicon Valley, including Seattle, L.A.
and Chicago, but one that consistently generates
buzz is New York. The concentration of start-ups
(originally centered in Manhattan) was rst dubbed
Silicon Alley in the 1990s, and has steadily clawed
back its credibility following the dotcom crash.
With its pedigree in advertising, new media and
nance, New York has lured R&D oshoots from
the likes of Twitter and LinkedIn, while drawing
start-ups from around the world. It is now dubbed
Silicon Subway, after the R line that links start-up
clusters from Brooklyn to Midtown East.

Over the last decade, the Shoreditch area

of London has become the UKs center of
entrepreneurial new media and Web 2.0 startups. The UK Government is now encouraging
further expansion into East London under the
banner of Tech City (piggy-backing on the
extensive development of the area for this
years Olympic Games). Google, Facebook
and Intel are among the big names establishing
outposts here, and the area has also attracted
numerous VCs.

Notable start-ups: FourSquare (location-based

social network), Tumblr (simple blogging platform),
Lore (Facebook for education).

Notable start-ups: Last.fm (socially-driven

personalized Internet radio, acquired by CBS in
2007), Mind Candy (creator of childrens social
game site Moshi Monsters), TweetDeck (social
media dashboard, acquired by Twitter in 2011).

mapping the new generation

of high-tech hotspots

For decades, Californias Silicon Valley has been the global center of high-tech
innovation. Its ecosystem of geeks, entrepreneurs, venture capitalists (VCs) and top
universities has been so powerful that other areas of the world have barely been able
to get a look in until now. Over the last few years, several cities and regions around
the world have begun to emerge as credible alternatives by creating that optimal
environment of collaborative innovation, coupled with the right economic, political
and cultural milieu for encouraging growth and investment.
Such is the gathering momentum beyond Silicon Valley that, in October last year,
Facebook founder and CEO Mark Zuckerberg stated that if he were to launch the
social network again, he would do it elsewhere.
But why does any of this matter to CIOs? Quite simply, because the technological
innovation that their organizations need to harness to build future success is
inextricably aected by the context in which that innovation takes place. If it only
happens in California, then typically only opportunities and problems that are
front-of-mind in California are likely to be addressed. That may be ne if your business
and customers are from the developed Western world, where a similar set of values
and challenges are likely to prevail, but less so when the planets emerging markets
form an increasingly important focus for any global operation.
Here, we highlight some of the hotspots meeting those more diverse needs
(although the list is by no means exhaustive, with places such as Toronto, So Paulo,
Moscow, Paris, Singapore and Sydney to name but a few also strong contenders).

32 JulySept 2012

Illustration: Paul Wearing

Diverse regional dynamics spur growth of

innovation hubs beyond Silicon Valley.

i n n o v a t i o n
BERLIN

SHANGHAI

A low cost of living, a cool subculture and

proximity to high-tech talent hotspots in eastern
Europe are attracting plenty of young entrepreneurs
to the German capital. With around 100 tech startups, theres a primary (but not exclusive) focus on
entertainment and games, and VCs are circling with
excitement. It still hasnt thrown up any huge names,
but with all the buzz, combined with the growing
inuence of the games industry on business
technology, this is denitely a hub to watch.
Notable start-ups: SoundCloud (social audio
storage, sharing and promotion site for musicmakers and listeners, relocated from Sweden),
6Wunderkinder (social-based online task
management software), ResearchGate (social
network for online scientic collaboration).

Although Beijing boasts the largest number of

tech start-ups in China, Shanghai comes a close
second and is generating more entrepreneurial
excitement. With a raft of high-tech talent, a strong
investment push from the citys government and a
number of ourishing innovation research centers
and incubators, it has already thrown up a number
of innovative new tech businesses. They are mostly
focusing on the enormous internal market at the
moment, but it is only a matter of time before one
or more starts to globalize their products.
Notable start-ups: Tudou (YouTube equivalent,
recently merged with competitor Youku), SmartCV
(exible online CV-creation app), FakeSpotting
(social network alerting members to fake goods
and other rip-os in the virtual and physical worlds).

KENYA

ISRAEL

With a strong focus on mobile and ecommerce

for the African market, Kenya is one of the
continents most connected nations and due to
its comparative lack of xed infrastructure, a very
high proportion of those online connect via mobile
devices. The government has been investing
to make the country Africas main tech hotspot,
following the pioneering work of local telco
Safaricom with its M-Pesa mobile payment system.
Adding to the buzz are several open innovation
spaces, such as Nairobis iHub.
Notable start-ups: Maduqa (online storefronts
for businesses), PesaPal (payments gateway
aggregating M-Pesa, web and banking
payments), Ushahidi (crowdsourcing platform
designed to aid social activism).

Israel has a long track record of high-quality

software design (particularly in innovative security
technologies). This isnt surprising the country
has one of the worlds highest per-capita spends on
R&D, a strong academic base and a high number
of skilled graduates. The area around Tel Aviv on
the coastal plain has been nicknamed Silicon Wadi
(Arabic for valley). Big tech names to emerge from
the country in the past have included Mirabilis
(developer of ICQ instant messaging) and Check
Point (security software).
Notable start-ups: PrimeSense.com (motionsensing technology behind Microsoft Kinect),
Boxee.tv (streaming Internet TV platform),
face.com (face recognition technology, recently
acquired by Facebook).

The rise of
The personal
cloud

34 July Sept 2012

O
N

Consumers embrace
off-premise storage.

C
F
d aTa
feed
l Consumers will
store 36% of their
digital content in
the cloud by 2016
(in 2011 it was
just 7%).
l Total worldwide
consumer digital
storage needs
will grow from
329 exabytes
in 2011 to
4.1 zettabytes
in 2016.
l Average
storage per
household (both
in-cloud and
on-premise) will
grow from
464 GB in 2011
to 3.3 TB in 2016.
(Gartner)

E
K

Map Wars

Apple and Google square up in the ght

for location-based services and data.
Since 2007, Google Maps has been the default mapping app on Apples
iPhone and around half of Googles map trac currently comes from iPhones
and iPads. But with the launch of Apples latest mobile operating system, iOS 6,
Googles oering will now be replaced by Apple Maps, which includes a satellite
view similar to Google Earth, real-time trac data, voice navigation, turn-by-turn
directions and 3-D views of cities. Although Google Maps will still be available for
iOS users through the Apple App Store for now at least Apples move is aimed
at reducing its dependency on its rival and gaining more control over valuable
user data as the market for location-based products and advertising explodes.
Developers who build location-based apps will be crucial to success in this
map war. Google has therefore struck back at Apple by unveiling a new pricing
plan for its Maps application programming interface (API) that cuts the cost to
developers for using its Maps data by 88%.
Google currently still dominates the mapping market 75% of the world is
covered by Google Maps, more than 800,000 developers use it, and it has
attracted more than 1 billion users across the world. Apple clearly has a huge
challenge on its hands if it wants to catch up, and so has struck a deal with
TomTom, the Netherlands-based satellite navigation company, to use its mapping
data. The other big players in this sphere are Nokias Navteq, which is used on
Windows smartphones, and the free open source OpenStreetMap, which is used
by location-based mobile check-in app Foursquare.
Despite concerns at the enterprise level that Apples move will ultimately
fragment the market, meaning organizations will have to develop location-based
services for yet another platform, in the short term its business as usual: the main
mobile mapping players are still Google, Nokia and TomTom, points out Martin
Garner, SVP of Internet at mobile and wireless industry analyst CCS Insight. At
the moment, Apple doesnt have its own maps or its own map data, he says.
But over time we would expect it to enter that market, to build up its own maps,
open up its APIs. What we dont know is if Apple will make that available to just
Apple developers, or more widely in the way that Google and Nokia do.

Map photo: iStock

As the public increasingly seeks

the ability to access and share storageintensive media such as photos, videos,
music and documents across multiple
devices, so the use of personal cloud
storage services is growing apace.
Consumer technology giants such
as Microsoft, Apple and Google have
all weighed in with oerings, attracting
users with plenty of free gigabytes
and, not surprisingly, theyre baking their
services into their own products, some
of which are more open than others.
There are many independent oerings,
too, most notably Dropbox, which has
carved out a strong presence in the
market by pre-empting the big players
and focusing on ease of use combined
with any-device compatibility.
One problem, though, is that
many users of devices from multiple
manufacturers have media stored
on a number of dierent personal
cloud storage services, not to mention
dierent devices. Fujitsus new MyCloud
service aims to help PC users bring
some much-needed order to this chaos,
without the need for time-consuming
data management. MyCloud can
automatically nd and organize all the
disparate data held on a users various
devices, as well as connecting to a
variety of dierent manufacturers cloud
services to upload or download data.
Given that employees commonly use
their own IT solutions in the workplace
either ocially or unocially CIOs must
now be aware that they are likely to store
work documents in their personal clouds
and must ensure appropriate policies are
in place to keep sensitive data secure.

i n n o v a t i o n

7
social Media

You have to create a

social enterprise today,
to be connected with
everyone who touches
your brand. If you dont
do that, I dont know
what your business
model is in five years.
anGela ahrendTs, ceo, BurBerrY

Just over a year ago, Angela Ahrendts, boss of 1.9 billion ($2.9bn) UK luxury goods brand
Burberry, held a brainstorming session with her CTO, John Douglas, and Marc Benio, CEO
of cloud software vendor Salesforce.com, in Half Moon Bay, California. There, on the back of
a cocktail napkin, they sketched out a vision for how Burberry would look if recongured as a
truly social enterprise: where customers have total access to the brand, any time and from
any place, via social media; and all of its 9,000 employees are connected into the business via
Salesforces collaboration suite.
By May 2012, Ahrendts and Douglas were speaking at Salesforces Cloudforce conference in
London, where they announced that they had realized their social vision in double-quick time.
It is, perhaps, no coincidence that the following day Burberry was able to inform investors that
sales and pre-tax prots for the year to March 31 had both surged by 24%.
To view the keynotes from Cloudforce London, go to: www.salesforce.com/uk/cloudforce

10 July Sept 2012

35

Externally focused

Chief
Innovation
Ofcer

The New

CIO
Chief
Intelligence
Ofcer

Chief
Infrastructure
Ofcer

Business savvy

Technology savvy

Chief
Integration
Ofcer

Internally focused

THE FOUR PERSONAS OF THE NEXT-GEN CIO

Faced with cost pressures and the encroachment of shadow

IT, CIOs need to demonstrate multiple traits, says Ray Wang.

Ray Wang is
principal analyst,
founder and CEO
at research and
advisory rm
Constellation
Research and
author of the
popular enterprise
software blog,
A Software Insiders
Point of View.
He also blogs
for Forbes and
Harvard Business
Review and has
served at Forrester
Research, Deloitte
Consulting, Ernst &
Young, Oracle and
PeopleSoft.

Just three years ago, CIOs were

riding high. They had multi-million
dollar project budgets, and pretty
much full control over IT across the
enterprise. But following the global
nancial crisis and the rise of the
consumerization of IT, a lot of things
have changed about the role. Id argue
there are now four distinct personas of
the next-generation CIO:
l Chief infrastructure ocer
With this kind of persona, the focus is
on trying to reduce costs, to do more
with less. Its all about operational
eciency and keeping the lights on.
That can account for as much as 60%
to 70% of an organizations IT budget.
l Chief integration ocer
Part of the job here is to bring
together the IT from all the M&As an
organization might make. But, more
importantly, this persona is expected
to connect internal systems with those

of suppliers, customers and partners as

the supply chain is extended. And 15%
to 30% of the budget is allocated here.
l Chief intelligence ocer
The challenge is to ensure the right
information is delivered to the right
person at the right time on the right
security model and, of course, on the
right form factor. And today that can
account for 25% to 30% of the budget.
l Chief innovation ocer
This is not necessarily someone from
the IT side often its an individual
drawn from the business side or the
transformation oce. Their job is to
gure out which new technologies and
processes will have the greatest impact
on the business.
There are very few individuals in
which all four of these skillsets come
together. At very large organizations,
you might nd four lieutenants to the
CIO separately playing these roles.

But what we observe elsewhere is that

shadow IT [in which business groups
purchase and introduce their own
solutions outside of the control of the
IT organization] is emerging to ll some
facets of these functions.
On average IT budgets are being
cut by 5% year-over-year. However,
net spending on IT is up 18% to 22%.
Guess whos got the money? The
business. The reason the IT budget is
being whittled down is that the business
side is buying SaaS applications and
iPads: its testing out new tools.
The pendulum will continue to swing
towards the business side for the next
two years but then start to come back
again as IT is tasked with rationalizing
whats going on with shadow IT. So
given the priorities are shifting, its very
important that CIOs coordinate the
dierent roles they are expected to full,
working as closely as possible with their
business colleagues.

i n n o v a t i o n

EASING THE wAy

TO THE NEw NET
Pain-free solution
for managing the
switch to IPv6.

The move from IPv4 to IPv6 is

the biggest change in the Internets
history, and CIOs need to be sure
their systems are ready. Early in 2011,
the last of the 4,294,967,296 unique
Internet addresses available under the
32-bit IPv4 protocol was allocated. Its
128-bit successor, IPv6, can support
a whopping 340 trillion trillion trillion
(thats 340 followed by 36 zeros). And
with billions more devices and sensors
predicted to come online in the next
ve years, there will be a huge upsurge
in IPv6 use.
However, the two systems are
incompatible. Ill-prepared organizations
could nd themselves cut o from
part of the Internet, unable to reach or
be reached by those using a dierent
protocol. Whats more, the transition is
likely to take a long time as, to date, only
about 0.1% of trac is running over IPv6.
CIOs will need to nd workarounds to
ensure they can use the two protocols
concurrently. One option comes from
Fujitsu whose SA46T/SA46T-AS
Datacenter Solutions makes it possible
to carry IPv4 transmissions over an
IPv6 network, as well as to share a
single IPv4 address across multiple
servers. Customers with data centers
deploying the technology can therefore
keep their IPv4 networks live for as long
as they need. Fujitsu is proposing the
technology becomes a global standard.
NEW EDITION

6
IPDirevctory

10

THE RISE OF SOCIAl HR

Tools to capture a more rounded picture of employees.

Most human resources (HR)

directors would agree that social
media has the potential to transform
the way we all work. However, while
there are some innovative employers
who embrace the opportunity to create
a more networked enterprise, there
are still plenty who view the rise of
sites such as Facebook, Twitter and
LinkedIn with trepidation enforcing
policies to restrict their use and in
some cases even blocking them.
Such views will severely impact the
health of their organizations, say some
informed observers such as Andrew
Flip Filipowski. The CEO of cloudbased HR software company SilkRoad
Technology argues that organizations
that fail to accept that social HR is the
way forward will die o. HR can use
social media to create a more threedimensional picture of where talent
and inuence lie in and around their
company, he says.
Filipowski is a digital veteran, having
founded database software company
Platinum Technology in 1987 and
selling it to Computer Associates for
$3.5 billion in 1999. His latest venture
is a talent management software suite
that allows organizations to capture
interactions on social media and link
them to employees career aspirations
and how they are rewarded.
Most HR directors believe that
their early wins from social media

have been in recruitment: sites such

as LinkedIn enable them to reach
passive candidates and expand
their networks beyond traditional
recruitment advertising. But Filipowski
argues that social HR is much more
than simply getting the right bodies on
seats. An employee might document
their abilities or aspirations on a
social networking site, or share some
information with a fellow employee
by documenting this or commenting
on it, its like a perpetual 360-degree
appreciation process, he says.
Based on this information, managers
might be able to see skills they had
not previously recognized, or valuable
connections to their customers or
supply chain that had gone unnoticed.
SilkRoads software suite includes a
tool called Point, which documents
these interactions in a similar way to
Klout, the analysis tool that gauges how
inuential someone is, based on their
Twitter and Facebook activity.
Does it follow that organizations
should now be recruiting and
rewarding employees based on
their social media inuence? Not
necessarily, says Filipowski: Its like
saying you should reward people for
having a hammer and saw. You reward
them for making a great cabinet. But if
someone uses their social network well
to come to a fabulous conclusion, then
yes, they should be rewarded.

D ATA
FEED
l 31% of
organizations
track employee
use of social
media on
company-owned
devices. (Society
for Human Resource
Management)

l 98% of HR
executives
believe social
networking is an
important tool
for recruiting,
training and
managing
employees.
(Achievers Social
HR Survey)

l 52% of HR
executives say
that senior
management
is the biggest
hurdle to the
acceptance of
social networks
as an HR tool.
(Achievers Social
HR Survey)

July Sept 2012

37

Delivering public-sector
IT services via the cloud
How the UK Governments CloudStore
is saving money and increasing exibility.
Words: Andy McCue

NAME: Andy Nelson

POSITION: UK Government CIO
CHALLENGE: To establish an internal
marketplace where national and local
government bodies can purchase pre-approved
cloud IT services on a pay-as-you-go basis.

The UK Government is targeting

340 million ($530m) in savings on its
IT procurement costs by 2015, and a
large-scale transfer of services to its
government cloud the G-Cloud, as it
has been named is a key element of
this. The goal is that cloud computing
will account for half of all new IT
spend by this date and a major part
of that drive is the recently launched
CloudStore online marketplace. By
using this, public-sector bodies, both
central and local, can easily compare
and purchase commodity pay-as-you-go
cloud services covering infrastructure,
software, platform and specialized
services from more than 280 suppliers
delivering more than 1,700 services.
After a ve-month procurement
process to sign up suppliers, the
CloudStore launched in February this
year. An updated second iteration
went live at the end of May, which has
extended the length of contracts that
can be bought to 24 months (in special
circumstances) and increased the
value of individual contracts that can
be awarded from 60 million ($94m) to
100 million ($156m).
Benets of a cloud store
As well as delivering potentially huge
cost savings, the UK Governments
CloudStore is also designed to speed
up and introduce more transparency
into the normally lengthy and complex
public-sector IT procurement process.
UK Government CIO Andy Nelson, who
combines this role with that of CIO at the
Ministry of Justice, says: If Im a buyer of
services in government, and Im using this
framework, I no longer need to go through
a long procurement process I can buy
the service there on the CloudStore.

T O P

The rst purchase made through the CloudStore

is a perfect example of this, Nelson points out. The
Maritime and Coastguard Agency (MCA), part of the
UK Department for Transport, successfully found and
compared suppliers then awarded an agile education
services contract in less than 24 hours.
Need for standardization
Nelson admits delivering the UK Governments vision
has its challenges. One of these is changing the buying
culture on the government IT side from one of high
levels of customization, where each department wants
its own tailored solution, to more standardization and
a willingness to accept commoditized, o-the-shelf
solutions. Its a dierent procurement journey, explains
Nelson. We have a tendency to want custom solutions.
Weve seen this time and again, that we must have all the
special requirements for every circumstance. Typically
that doesnt t the cloud world of selling commodity
services, so weve got a real challenge there.
But in an era of government austerity measures,
the need to deliver real cost savings will be a driver
to changing this culture, according to Nelson. I think
theres a great opportunity to do that, because in a
world of little or no money, frankly there is still a huge
demand for services, so weve got to exploit commodity
services to [meet that demand], he says.
Managing suppliers
Persuading government bodies to buy IT through the
CloudStore is just one side of the equation, however.
The other is attracting a wide range of suppliers
both large and small to the store in order to make a
more competitive marketplace. I am really interested
in seeing a broader range of suppliers come in and
disturb that market. [But] you could end up with a more
complex supplier model, so another challenge internally
is service management, says Nelson.
He also highlights the importance of making the
accreditation process simpler and faster to attract more
suppliers. So far, the process has been streamlined
for vendors who want to sell services through
the CloudStore, with no lengthy pre-qualication
questionnaire, less stringent nancial history

In a world
of little or no
money, weve
got to exploit
commodity
services.

O F

M Y

A G E N D A

requirements, simplied mandatory

specications and standardized provision
of services. We want to be able to assure
services prior to them being used, and
we accredit them once and once for all
government so people in any central
department, or at a local level, can use
them, says Nelson.
Simplifying security
Security is also a big issue. There are
currently six levels of accreditation that are
in line with CESG (the CommunicationsElectronics Security Group), the UKs
national technical authority for information
assurance, and the government is
aiming to have some of the CloudStore
products and services approved up to
level three (where level six is the most
secure possible). This means that most
government buyers will be able to use
those services straight o the shelf without
having to accredit them again.
We are genuinely trying to simplify this
process, says Nelson. Thats easier said
than done. But in terms of simple templates
for suppliers to complete in order to obtain
accreditation before they pass the security
check, weve simplied that.
Progress so far
Early results since the CloudStore launched
are encouraging, claims Nelson. Around
30 government bodies ranging from the
MCA to big central departments such as
the Ministry of Justice and Department
for Business, Innovation and Skills have
made purchases, with values ranging from
a few hundred pounds to over 1 million
($1.6m). Its early days, says Nelson. But
Im pleased with the progress so far. l
l Andy Nelson was speaking at Cloud
Computing World Forum in London.

July Sept 2012 39

s T R A T E G I C

Logistics

F O C U s

managing:
the
future

IT

As agility and rapid innovation become top business

priorities, organizations are breaking down their
rigid management hierarchies with the help of IT.
Words: James Lawrence

M arket
er
The way that most organizations manage is changing. The
century-old traditional systems of bureaucratic, rigid hierarchies and
centralized command-and-control management processes, all geared
towards creating maximum eciency and minimum waste, are being
replaced by more uid, atter organizational structures where key
decisions can be made quickly by small teams without high-level
approval and often in collaboration with people and organizations
from outside of the business.
A growing number of analysts and academics have observed that
this is happening because the primary imperative for most enterprises
in a truly globalized, increasingly interconnected, fast-changing, complex
and uncertain business environment has shifted: eciency must now
be treated as a given, while agility, exibility and rapid innovation as
enabled by these new management models now gure far higher on
most CEOs lists of priorities. (For an expert view on this from leading
business guru Gary Hamel, see Management re-invented, page 44.)
This situation, of course, presents a whole new set of challenges for IT,
whose traditional role in the enterprise has been to centralize, rationalize
and drive eciency, rather than encourage diversity and autonomy in
deliberately complex organizational structures. With the application of
appropriate technologies and the right approach to leadership, such

40 July Sept 2012

IT

IT

Sales
rvices
Customer se

Accountant

IT

Production

Marketer

or
Administrat

HR

Production

Facilities

IT

Lawyer
Marketer

IT

Production

HR
IT

Lawyer

IT

Administrator

Sales

Accountant
challenges are not insurmountable but those CIOs who fail to adapt
to this new way of thinking, and are not prepared to re-adjust the role IT
plays in their organization, may soon nd their days are numbered.

Smarter decision-making
Many of the organizations at the vanguard of this new way of managing
are technology companies themselves, such as Google and Facebook,
where, for example, employees work in small, nimble, autonomous
teams that are frequently assembled and dismantled on a project-byproject basis. However, such ways of working are no longer limited
to youthful Silicon Valley businesses born of the Californian start-up
culture. New approaches to structuring and managing organizations
are creeping into more traditional enterprises all over the world, in
every industry sector.
One prime example of this is Statoil, a Norwegian-headquartered
oil and gas company with annual sales of $120 billion. In 2005, the
business abolished traditional budgeting. In its place, it introduced
a process called Ambition to Action with the stated aim of creating
a more dynamic, exible and self-regulating management model.
Instead of combining the three traditional elements of budgeting
target-setting, forecasting and resource allocation into the usual single

process, the company separated them into three

distinct processes. The most benecial upshot of this
has been that resources can now be allocated as
and when appropriate to the business need, at any
time during the nancial year, rather than at the start
of an annual budgeting process (with what frequently
felt like a good degree of guess-work).
This dynamic resource allocation now allows
corporate nances to be swiftly diverted to projects
when and where they are required, with a minimum
of bureaucratic hold-ups. It also gives local teams
the necessary autonomy to respond quickly to
events whenever they spot an opportunity, by
allowing employees to make decisions at the right
time and at the right level. In the turbulent and
unpredictable world of oil and gas exploration, this
agility gives Statoil a valuable competitive edge
against its rivals.
Of course, digital technology is vital to support
this way of working. Ambition to Action is all about
prioritizing initiatives and ensuring we are doing the

July Sept 2012 41

right things, says Sonja Chirico Indreb, Statoils

CIO. Were a very IT-intensive company, so IT is a
solution for this process.
One of the key elements required for Ambition
to Action to work has been a standardized ERP
platform, which has delivered the access to corporate
data that is necessary for teams away from the center
to make well-informed, eective decisions. We have
a single global ERP platform, says Indreb, who
heads an IT operation that supports 21,000 Statoil

UK subsidiary, O2, launched an experimental stand-alone operation

with a revolutionary business model enabled by digital technology.
Named Giga, the mobile virtual network operator (MVNO) fully
leverages the power of social technology to break down the barriers
between paid employees inside the organization and its customers,
as the latter group plays a major role in delivering customer service
(via online social media), as well as making signicant contributions
to marketing and new product development.
Instead of running a large team of customer service agents and all the
expense that would entail, Giga lets its online community of subscribers
answer queries on behalf of the business. They
do this on Gigas own online forum and also
via the usual social media channels, such as
Facebook and Twitter. Only when a serious
issue arises that requires the disclosure of a
customers personal information does one of
the companys small team of service agents
become involved.
Response times from Gigas highly
engaged and committed customer
community are, quite simply, astounding.
Most large enterprises with state-of-the-art customer service
operations aim to respond to queries posted via social media within
30 to 60 minutes, and frequently only during oce hours. On
average, our members will post something and get a response in
70 seconds 24/7, says Claire Kavanagh, CRM manager at Giga.
So its quite an incredible customer service experience.
Customers also work for the company in other ways. Introducing
new customers can earn existing subscribers a 5 ($8) gift, which
can be taken in cash, airtime credits or donated to charity. One highly
committed customer, aged just 17, earned himself 14,000 ($21,900)
in a single six-month period, essentially making himself Gigas most
eective salesperson. Others have contributed brand extension ideas
and helped with product testing.
While Telefnica is cautious about releasing gures for its whollyowned subsidiary, it is clear that Giga is enjoying some measure
of success: more than two years down the line it is still going strong.
Whats more, Gigas customers are extremely satised with the way
the business operates. We have found that our Net Promoter Score
is much higher than the industry average, says Kavanagh. In July
2011, the company claimed a score of 75 (anything above 50 is
generally considered to be good) and a customer satisfaction
index of 84%. It was also awarded Best MVNO at the UKs Mobile
Industry Awards for 2012.
Of course, such a community of voluntary customers/contributors,
who can stop or leave at any time, cannot be managed in any of the
traditional top-down ways. Instead, Giga aims to engage with them
as transparently as possible and then allows the community to selforganize and self-regulate. We started o by trying to think dierently
in the marketplace we wanted to be neutral, fair and open. And these
principles have taken us through, Kavanagh says.
Openness is a common theme that unites all enterprises that are

It allows
k.
wor
to
way
l
erfu
pow
a
s
i
n
o
ti
ora
lab
col
e
n
li
On
us to overcome hierarchical barriers and
just one
reduces bureaucracy. Everyonekisawa
clic y from anyone else.
employees in 36 countries. This makes it easier
for people to understand that they really and truly
have the overall picture and they dont have to
look across a lot of dierent solutions to nd it. In the
IT world, standardization is actually key in order to
enable this level of transparency.
And this, Indreb believes, is key to making
employee empowerment work eectively. Its very
much about building trust, and you get that by having
a large degree of transparency.
The result, she says, is smarter decision-making
throughout the business. It gives you the opportunity
to have competent employees deciding what is the
right thing to do instead of having somebody else
telling everyone what they should be doing. So its
not a rigid process where you start from the top. Its
more like: OK, if I know that the goal for me is to
deliver in this area, then how can I do that?
Whats more, Statoils IT organization itself has
beneted from the introduction of Ambition to Action,
allowing it to play a key role in setting and executing
the corporate strategy. It enables us to respond
quickly to requirements coming up from the business
line, says Indreb. And if internal IT isnt providing
what your company needs, its hard to be a good
partner and be included in the strategic discussions.
Blurring organizational boundaries
An even more radical example of an organization
that has reinvented the way it works comes from
telecommunications giant Telefnica. In 2009 its
42 July Sept 2012

s t r a t e g i c

Claire Kavanagh of Giga was speaking at Social Media for Customer Service Europe.
Carmen Lpez Herranz of BBVA was speaking at Cloud Computing World Forum.

aiming to move to this more decentralized way of

working, as it facilitates collaboration both internally
and beyond their own organizational boundaries,
as in Gigas case. Statoils Indreb, for example,
highlights that her companys core values are:
courageous, caring, hands-on and open.
The open one is especially important here,
she stresses, as it allows us to collaborate
internally but also extensively with our partners
and vendors. As a business, were very dependent
on the outside world in order to succeed. So its
about nding the situations that are enabling
faster implementation of our goals for example,
bringing more knowledge into a process and
ensuring that were able to utilize people from
wherever they happen to be, instead of needing to
have everyone in the same place. And its all based
on digital communication.
Reducing bureaucracy
Another company that is using IT to break
down traditional organizational and bureaucratic
barriers is Spanish bank BBVA, a business
that has a strong focus on technology-driven
innovation. The bank is currently rolling out the
cloud-based Google Apps suite to its 110,000
employees in 26 countries, with the stated aim
of facilitating collaboration within the business,
regardless of peoples status or location.
The process began in January 2012 and is due
to complete by the end of the year. Some 30% of
the banks employees are currently using the tool,
and senior management from CEO Francisco
Gonzlez, who personally sponsored the project,
downwards are already noticing a radical
change in the way the business functions.
This is a powerful way to work, says Carmen
Lpez Herranz, director of technology innovation
at BBVA. It allows us to overcome some very big
barriers both geographical and hierarchical
and will reduce bureaucracy. Everyone is just one
click away from anyone else in the business.
And although the technology is important,
argues Herranz, its the way it is applied, and
the transformational eect it is having on an
organization that is facing a very challenging
business environment, that matters most. Its
much more than just a technology platform, she
says. Its an agent for change, allowing us to build
and operate a new model for the company.
Organizations everywhere, regardless of size,
sector or maturity, should take note.

f o c u s

Case study:

Changing the way

a business works

How a global collaboration platform has

transformed management processes at
building materials manufacturer CEMEX.

In 2010, CEMEX, a $15 billion Mexican building materials company, introduced

an online collaboration platform that has not only facilitated communication across the
50-plus countries in which it operates, but has also allowed the organization to
fundamentally change the way its 44,000 employees work.
The platform, called Shift which CEMEX describes as a social network with a
business focus was deployed at the instigation of CEO Lorenzo Zambrano, who
was concerned that the challenging economic climate was forcing the organization
to put too strong a focus on eciency and standardization at the expense of what he
believed was the most important requirement for competitive advantage: innovation.
The Shift project was led by Gilberto Garca, head of innovation at CEMEX, who has
an extensive background in senior IT management at the business. His clearly stated
aim was to make the company more innovative, ecient and agile by letting employees
or groups of employees with similar objectives share opinions, thoughts, information,
experience, knowledge and best practices.
However, claims Garca, it is doing far more than that: It is transforming the way we
work. He continues: In the rst place, the way senior management communicates and
interacts with employees has changed dramatically. In other words, Shift has narrowed
the gap between executives and the rest of the business. An example is our executive
vice president for Mexico: his principal way of communicating is now a blog, says Garca.
He writes it every two or three weeks, and normally within hours there are over 100
comments. Now many other regional directors are using the same way to communicate.
But Shift has precipitated something even more fundamental in the business.
There has been a change in our management structures, says Garca. Now there
is a common sentiment that you dont work for your department, or you dont work
for your boss. You work for the company and, of course, it is a global company.
One example of how this works is CEMEXs Construction for the 21st Century
Community which focuses on key strategic objectives for the future. The group has
400 members, mostly self-selected according to personal interest and expertise rather
than having been appointed from above. Furthermore, it is not controlled by top
executives; instead, leaders for each topic were dened collectively, based on all
members decisions and input, in a democratic, yet strategic, manner.
The Shift project has not been without challenges, however. For some executives,
it was dicult, admits Garca. But for the most part our company was very open and
eager for new technologies and ways of working. And once everyone discovered
the value of this new channel, they came on board.
Garca is full of praise for the way CEMEXs IT department has enabled the
rapid adoption of Shift by every employee. IT worked very closely with us, he says.
Our goal was to have the same level of performance that you have on Facebook,
with a user interface as friendly as Facebook. The IT team did a great job in
understanding these needs and very, very quickly integrating a
comprehensive solution.
JulySept 2012 43

Management re-invented

Organizations urgently need to hack their

management practices and CIOs must play
a key role in this, argues Gary Hamel.

Gary Hamel is the

author of several
highly acclaimed
business books,
including The Future
of Management and
What Matters Now,
and was recently
named as the
worlds most
inuential business
thinker by the Wall
Street Journal. He is
a visiting professor at
London Business
School and founder
of California-based
think-tank The
Management Lab.

Traditional management or Management 1.0 is a set of tools

and methods that organizations use to control, mobilize and organize
resources to a productive end. It is, in eect, a form of social technology
and over the past century or so it has been extremely successful at
enabling enterprises to operate at scale and drive out ineciencies.
Organizations today, however, are faced with new challenges where
simply more of this old-style control is not the answer. Were in a world
where change is accelerating and where strategy lifecycles are
shortening. Enterprises therefore have to not only be very ecient but also
very adaptable. Whats more, they are competing everywhere and all the
time, and the only way they can win is by out-innovating everyone else. As
a result, the ability to both stimulate and harness human imagination has
become a critical competitive edge. Yet in our old management model we
are mostly trying to turn human beings into semi-programmable robots.
IT has been partly responsible for this control and centralization:
for the rst time in history organizations can set policy and standards
centrally, knowing that everybody is going to see them. As a result, the
ability to rule by diktat from the center is stronger than its ever been.
Changing this way of managing is not easy, as were up against a
DNA-level problem. Think about trying to train a dog to walk on its hind
legs. If you use the right incentives, you can get the animal up and itll
take a few hopping steps. The moment you turn your back, however, itll
be on all fours again because a dog has quadruped, not biped, DNA.
Similarly, executives in companies today realize that their businesses
have to be more adaptable, innovative and inspiring places to work.
Unfortunately, like the dog, their organizations are genetically incapable
of meeting those challenges.
In any healthy company, imagination and creativity are widely
distributed and when you give people the tools of creativity and open
up avenues of contribution, you see an explosion of imagination. In a
traditional, hierarchical organization, the prevailing ethos runs against
this. You can create wikis, electronic suggestion boxes, idea markets and
so on, but until you have a fundamental rethink of roles and capabilities
and the way in which resources are allocated within the business
there can never be a true democracy of ideas.
Innovating management
So what can IT do about all of that? Firstly, its important to understand
that were still at the very beginning of a new era of management. If you
look at the origins of Management 1.0, it was invented over a 25-30 year
period starting in the last decades of the 19th century. Back in 1890, it
would have been hard to imagine that by 1915 youd have a business
like Ford making 500,000 cars a year. Likewise, in 2012 its hard to
imagine what organizations will look like 10 years from now. But the
companies that are daring to ask the dicult questions and starting to

44 July Sept 2012

S T R A T E G I C

Photo: pixelate.com

be explicit about innovating management will be the

winners. Just as all the companies that dominated the
20th century were management innovators, the same
will be true for the 21st century.
So, were currently moving forward without a very
clear model. And for many managers thats scary, as
they are afraid to change until they have somebody
elses best practice clearly in view but unless you
can think beyond best practice it is impossible to
invent any new practices.
The only place you can start to do that is with
principles. If we acknowledge we need organizations
that are more adaptable, more innovative, more
engaging and more socially accountable, we must
ask: What in our world already exhibits these qualities?
The answer, of course, is the World Wide Web. If you
think about management as having been the most
important social technology of the 20th century, the
social web is the most important of the 21st century.
And if Management 1.0 was built around the ideology
of control, the web is built around the ideology of
freedom: you join the communities you want, and
you are at liberty to go where your interests take you.
Learning to experiment
However, the fundamental constraint on how we use
technology in our organizations is not technology: it is
management ideology. Therefore the real challenge
today for IT leaders is to spend less time thinking
about specic technologies and more time learning to
understand the deep principles that underwrite this
new social system on the web. That is, meritocracy,
openness, transparency, disaggregation rather than
aggregation, things that are small and mashable and
can be constantly reused and recombined, choice
and opt-in, and community rather than hierarchy.
Organizations must learn to bake all of these
principles into their management processes in the
same way they have baked in product innovation,
conformance, alignment and so on. Where CIOs
have traditionally spent a lot of time thinking about
IT architectures, they must now devote a lot of their
thinking to management architectures. How do
decisions get made? What information gets to the
top? Who has the ability to allocate resources?

F O C U S

But ask yourself: If you are going to completely rethink or hack

your management processes, how would that work? Because when it
comes to reinventing management, an organization cannot leave that
problem to the people traditionally seen as the experts: the heads of IT,
nance, HR and so on. You cannot ask the people who own todays
systems to invent tomorrows, any more than you could have expected Bill
Gates to invent Google. They just have too much invested in the old model.
To meet this challenge, therefore, organizations must start to learn how
to experiment around management. Five years from now every company
will need to have opened up its core management processes and asked
its employees to hack them in a constructive way.
CEOs must realize that the new social technologies are critical to getting
fresh ideas into the strategy process, more meritocracy into organizational
structures and better ideas to the top more quickly, and for distributing the
responsibility for allocating capital. They must therefore charge their CIOs
with building a portfolio of technology-based management experiments
because the pace at which any company can evolve the old model is
absolutely determined by the number of experiments it is conducting
and only those that evolve faster than their competitors will win.
l For more on Gary Hamels ideas on re-inventing management, see:
The Management Innovation eXchange, www.managementexchange.com

s
n
io
t
a
i
n
a
g
r
o
l,
e
d
o
m
ent urn human
m
e
g
a
n
a
m
ld
o
e
h
t
ln re mostly trying to t ble robots.
a into sem i -programma
beings

Coming
soon in

Special Report: Reshaping the role of CIO

Thanks to the shift to new IT delivery models such as cloud and mobile,
coupled with the digital wave sweeping through all facets of modern
business, the function and the career opportunities of the CIO are
changing fundamentally. With input from some of the worlds leading
technology decision-makers, we examine the key IT megatrends that are
driving this shake-up and ask where the role of CIO is headed.

Social media: Beyond marketing

A growing number of organizations are using social media to optimize
their customer interaction and enhance customer satisfaction. In a series
of case studies from some of the worlds most admired companies,
we explore which approaches are successfully delivering great customer
service and engagement through social technologies and the pivotal role
IT needs to play in supporting that.

Plus: More in-depth interviews, reports, analysis and case studies

covering key agenda items for the worlds leading CIOs.

I n t h e m e a n t I m e f o r d ow n loa da b l e data , v I d e o s , e v e n t s a n d m o r e
e s s e n t I a l I n f o r m at I o n f o r C I o s , g o to : www.i-cio.com

This
way
up

Wayne Shurts, CIO of grocery

group Supervalu, can draw
on deep business experience
when informing the companys
ambitious turnaround strategy.

Wayne Shurts
is executive vice
president and chief
information ocer at
US grocery group
Supervalu. As well as
information systems
and process
expertise, his career
has included
business roles in
nancial, marketing
and sales analysis,
supply chain and
logistics, sales
operations and
ebusiness.

Words: Jessica Twentyman

Portrait: Joe McKendry

Business, fast and simple. That is the mantra that

guides Wayne Shurtss working day as CIO of US grocery
retailer Supervalu. Perhaps it helps him keep a cool head in
an environment that he happily describes as a whirlwind.
Supervalu is the USs third largest grocery group, after
Kroger and Safeway, operating a network of around 2,500
stores nationwide, under brand names including Albertsons,
Farm Fresh and Shop n Save. It also sells groceries on a
wholesale basis to some 2,200 independent retailers. But it
is also a company very much in turnaround mode: with its
$6.3 billion acquisition of Albertsons back in 2006, it took
on $6.1 billion of debt, and encountered further challenges
as the recession took hold in 2008.
This is Shurts rst real engagement in a major business
turnaround strategy, after a career spent predominantly
at some of the worlds most-established snack foods
companies, namely Nabisco, the US biscuit maker, and
confectionery company Cadbury. Its really opened my
eyes, he says. Theres so much to do and so much at
stake that everything kind of moves at fever pitch.
Its an exciting opportunity, he adds, and one that requires
a dierent way of thinking about business. The heightened
sense of urgency means that getting to value fast with new
projects is paramount.
It was a dierent picture when he joined Supervalu in
2010. He found a disparate, cluttered IT environment that
simply didnt t with his fast and simple vision. This was, in
part, a legacy of the purchase of Albertsons, which in turn
had made numerous acquisitions of its own over the years.

19811983
Financial analyst
Nabisco

19841985
Manager, nancial
& market analysis
Nabisco

While a project was already underway to consolidate these disparate

systems onto a single company-wide ERP system, Shurts put it on hold.
It had been running for three years, with little to show. So every piece of
work already underway was taken to its next logical cut-o point, which
we can come back to later and we will.
Guerrilla tactics
In this way, he was instead able to channel the IT departments resources
into what he describes as guerrilla projects quick xes that take into
account the environment that Supervalu has in place today and address
its limitations in ways that can make a dierence in three weeks or three
months and give real advantage to the business.
This is the question I constantly ask of myself and my team, says
Shurts. If we need to accept, for the time being, our disparate legacy
environment as the reality, what are the technologies we can put over
the top of it that can drive business value quickly? To date, these
technologies have been very data-centric: they include decision support
tools for creating reports and metrics, and integration tools that knit
disparate systems together connective tissue, as Shurts calls it.
Dealing with the legacy of the past is one challenge. At the same time,
however, Shurts must prepare for the challenges of the future. Its a tough
balancing act, he says, but points to the recent company-wide adoption
of social networking tool Yammer as evidence that Supervalu continues
to move forwards, technology-wise.
This was a great project, says Shurts. Yammer is software-as-aservice, so it was up and running in no time, with very little resource
needed from our side, but its impact has been huge in terms of helping
us to work as one organization. Store managers from dierent towns
and states, who had never spoken to each other before, are now in close
day-to-day contact. And across the company, hierarchies have been
attened by the ow of ideas and knowledge.

19861989
Manager,
sales analysis
Nabisco

Shurts says he has always been passionate about the

way technology can deliver positive business outcomes,
a trait that stretches right back to the start of his career
at Nabisco in 1981. With a degree in nance and
management, he naturally began work in the nance
department, but after four years moved over to the sales
organization to take on a sales/marketing analysis role.
Remember this was the mid-1980s, when scanners
were being introduced for retail point-of-sales and the
whole CPG industry was starting to recognize the value of
data collected in this way. My job was to analyze that data,
which meant working with the IT department every day. I
was its biggest fan and its biggest critic so Nabisco
moved me over to that department to run sales IT, he says.
Shurts rst IT role was a real eye-opener, he says. What I
found in the IT department were smart, talented people who
really wanted to make a dierence and do the right thing,
but often werent able to, because the company didnt
necessarily have them working on the right things.
For me, coming from sales and knowing what the
agenda was in that department, it was a great job, because
all I had to do was map out that agenda to those smart
people and, all of a sudden, they were making a dierence
and doing the right thing. The same approach, he says,
worked equally well in a subsequent role in supply chain IT.

SuddeNly, what teCh

CaN do for buSiNeSS iS
firmly froNt-of-miNd
for buSiNeSS leaderS.

19891992
Director, sales
& marketing
information systems
Nabisco

19971999
VP, supply chain
process (N America)
Nabisco
19921993
Director, logistics
information systems
Nabisco

19931997
Snr director/VP,
sales operations
Nabisco

T H I S

By the late 1990s, Shurts had broad experience across nance, sales,
supply chain and IT, making him the best candidate to lead Nabiscos
implementation of a company-wide ERP system from SAP. From there,
he became the companys head of ebusiness, before leaving the
company in 2001, a year after its acquisition by Philip Morris and
merger with Kraft Foods.
Focus on value
After 20 years at the same company, Shurts next move was bold: at the
tail-end of the dotcom boom, he set up a management consultancy rm,
the PrinciplesGroup, with two colleagues. The company focused on
helping rms with large-scale ERP implementations, at a time when the
press was full of horror stories of such projects going hugely over budget,
way over schedule and, in some cases, ending in outright failure.
Shurts says he took from this four-year consultancy stint a greater
sense of entrepreneurism and a broader perspective: When you
suddenly have to meet payroll, nd new business opportunities, with no
big corporate moneybags backing up your decisions, you have to get
serious very quickly about focusing on value. That experience has been
embedded in my mind ever since and has served me well.
What his next role brought was international experience. In 2006, he
joined UK confectionery group Cadbury as SVP of IT for its Americas
markets. Two years later, he was made global CIO of the company.
One thing that absolutely stood out for me as I gained this international
perspective was the agility of our IT operations in emerging markets. In
Brazil, for example, or India, Id often nd more innovation and creativity
among the sta, and leaner, faster local technology solutions, than Id
ever seen in our established markets such as the UK, US and Australia.
In fact, some of those emerging-market solutions were later
successfully applied in Cadburys developed-market businesses and
provided Shurts with further insight into how technology could be

20002001
VP, ebusiness
Nabisco

W A Y

U P

deployed in fast and simple ways for business benet. (For

more on this kind of reverse innovation see page 24.)
Shurts left Cadbury in 2010 to join Supervalu. I knew I
could play a signicant role in Supervalus turnaround, he
says, because data and the insight it gives is what can really
change the trajectory of sales and customer understanding
in a retail business. After all, he says its data that is already
helping Supervalu to reduce in-store product wastage,
improve in-store promotions, sta its outlets more eciently
and streamline its logistics.
To get the most from that data, he says, IT and the wider
business must work closely a key tenet of the business, fast
and simple approach. This has required a re-organization
of Supervalus IT function, with Shurts embedding sta
members in business departments and beginning to move
from lengthy, process-driven waterfall methodologies for new
developments to a more agile approach.
Shurts has also implemented business immersion days
for the IT workforce: each year, everyone is expected to
spend one to three days doing the work of employees for
whom they develop systems.
Its this kind of initiative that will give them just a taste of
the experience that Shurts has acquired over his 30-year
career. There are plenty more challenges to come for
him and his team, he says, especially as the way in
which consumers share information and make purchasing
decisions continues to shift online. For a company CIO,
he adds, thats great news in terms of how it can impact
IT professionals reputation within management.
Suddenly, what technology can do for the business
is rmly front of mind for business leaders, he says. l

20012005
President
PrinciplesGroup

20062008
SVP, IT (Americas)
Cadbury

20082010
CIO
Cadbury

2010present
EVP & CIO
Supervalu

July Sept 2012 49

o u t

o f

o f f i c e

Javier Fransoy
CIO, Grupo Molino Cauelas
Leading our and vegetable oil producer
POLO PLAYER

In polo, as in IT, success

is about defining clear
strategies and working as
a team to achieve goals.
50 July Sept 2012

Photo: Javier Fransoy

Here in Argentina, polo is a way of life. Ive always loved

the sport, having followed it since I was a child, but I only
really started playing seriously two years ago perhaps not
surprisingly, as the town of Cauelas [near Buenos Aires]
where were based is often called the Capital of Polo.
My family always had horses and when I was growing
up I would ride every day that I could. For me, that points
to the most important attribute of a polo player: a deep
understanding and appreciation of horses. Of course,
physical tness is important, as well as nance (with a
requirement for at least two ponies, it is not an inexpensive
sport) but good riding skills and the ability to
communicate with the animal are paramount.
What I enjoy most when I play is the contact with the
horse and the speed of the game. With eight ponies
on the eld, all moving at speed, it can be dangerous and
accidents do happen, but the rules are strict and help
to minimize the dangers to both players and their ponies.
At my polo team, El Relincho, I help develop strategies
and tactics for my teams dierent games, and thats
where there are real parallels between polo and my work
as a CIO. Whether its a game of polo or an IT project,
players with dierent roles and skills must work together,
and in both situations success is a matter of dening clear
objectives and strategies and collaborating closely as a team
to achieve our goals. The position I most often play in polo is
number three: its the engine of the polo team, and at work
I view myself as the engine of the IT department, driving
alignment between technology and business needs.
I now play every weekend during the season, which in
Argentina runs from September to May. This year, my team
won a mixed tournament, which was a very proud moment
for me. But even out of season, I visit my ponies, Yana and
Bingo, for at least an hour each day.
The best thing about polo for me, however, is that it has
become our family sport: my wife and children also play,
and its great to share this passion as a family. l

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