At most companies, responsibility for product technology is still strictly separated from process IT. Product technology (or operational technology, OT) is the technology that forms part of the products and services produced and offered by the company. Process IT in turn is the technology used to automate and optimise internal and external processes, i.e. an ERP, sales or supply-chain system, etc. Typically, the CIO oversees process IT, and someone else (product development, CTO, etc.) is in charge of product technology.
With product technology becoming more and more digitalised (i.e. IoT embedded in products, software-defined products, etc.), it is becoming difficult if not impossible to separate the two. The close interaction and alignment of the two are essential. Methods and patterns well established in process IT need to be adapted to product technology, such as cybersecurity or the ability to interact with and update products to an extent far beyond the mere delivery of products to customers. A good example is the car manufacturer Tesla, which realised that its vehicles are not “finished” products when they leave the assembly line but need to be constantly updated and therefore also constantly connected to the product life-cycle management system (PLM) of the back-end ERP system. The shift from hardware to software (software-defined products) amplifies this effect. A new Tesla model is often just a software upgrade, and customers can buy additional performance and features (i.e. additional battery capacity) online and get the additional functionality provisioned to their vehicle instantly and online, without having to take the car to a service station or garage.
This shows that the times of separation of product IT and process IT are over. With the digitalisation of products, the two disciplines are converging to become an inseparable unit. Therefore, the traditional separation of the role of the CIO, as the person in charge of process IT only, from that of the CTO, who is in charge of product technology, will disappear. Tomorrow’s CIO will either manage to position him/herself as the person who also drives product innovation through technology or, if not, become irrelevant, left simply to look after some parts of the infrastructure and legacy back-end systems.
With a business-minded CIO who also drives the digital agenda of his/her company, including the innovation and digitalisation of products and services, his/her role moves out of the back office and into the core of products and services. One of the key priorities of tomorrow’s CIO will be focusing more on strategic topics of technology as the enabler for new business models, products and services, driving innovation through technology (including product innovation).
This however also requires the CIO to be capable of working and thinking in networks, rather than just traditional hierarchical thinking. The relevant concern in networked structures is not reporting lines but rather the impact that one can make on the business.
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Chapter 4 “Virtualisation of ‘things’” will appear shortly. Previous Chapter: https://acent.de/the-future-role-of-the-cio_2/
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Patrick Naef | 14.01.2020