It's no secret that IT is in transition and many CIOs have shifted focus from infrastructure and operations to business outcomes and innovation.
Operational excellence, delivering projects on-time and within budget, is no longer the goal of IT, but has become the bedrock on which the CIO must build user trust and confidence. Collaboration with stakeholders to prioritize IT activities according to business needs is the hallmark of modern CIOs.
The shift from CIO as a technical caretaker to innovator is hard. Users are no longer willing to wait days, weeks, and months for IT to manage requests for help.
Changes in how people work add to the challenge. Whether in the office, at home in the middle of the night, or on the beach during a vacation, employees expect safe, secure, simple, and always-on access. For workers, having a secure mobile office is now a business necessity.
Given all this, the best CIOs emphasize a customer-centric view that places end-users, rather than systems, as the reference point for decision-making. In other words, user satisfaction has become a crucial metric for evaluating the success of IT.
With these changes, the rise of younger CIOs who came up through the ranks as business people, rather than experts in IT infrastructure, is inevitable.
On episode 236 of the CXOTALK series of conversations with innovators, Dion Hinchcliffe and I spoke with one of these new CIOs. Thomas Saueressig is the CIO of enterprise software vendor SAP and one of the few Millennial Chief Information Officers in the Fortune 500.
The wide-ranging discussion touched on topics such as empathy toward users, designing an IT organization, and the role of cloud as an enabler of innovation. Thomas also shares his guiding principles for building and running an IT organization that is responsive to customers.
Watch a video of our entire conversation embedded at the top of this page and read edited parts of the conversation below.
The complete video transcript is also available at the CXOTALK site.
Explain your role as CIO of SAP?
I support and enable new business models [at SAP]. SAP is 45 years old, coming from a licensed maintenance business model, and now impressively moving to the cloud, which means a subscription and consumption-based [model]. We aspire to become the most innovative cloud company in the world.
As CIO, you need to make that possible; to enable this for SAP as a company. On the one hand, enabling these digital business models and business processes. But, on the other side, providing a digital workplace to the employees. Helping make SAP users the most productive in the world.
How does a company like SAP transition from on-premise to the cloud?
In a licensed world, you have a big deal, up-front cash, and then you monetize it throughout the maintenance period. In the cloud world, with subscriptions, you have monthly recurring revenue streams. This changes the fundamentals of sales. It also needs to change the culture of sales.
It's a lot of pressure on the sales side, but also, the same on the finance side. If you think about the difference in liquidity management and treasury, which we see, which we need to enable to make that possible.
This change is going through the entire company end-to-end, starting with digital marketing approaches and high-volume sales processes as well. And that's exciting as well, to get new sales channels. We're going into online sales, into digital sales channels, with the sapstore.com to facilitate the trial and buy process throughout the entire web experience which we offer.
This is exciting from an IT perspective because customers of SAP go to sapstore.com and get a trial, buy the solutions, all online without any human interaction. The process is 100% optimized and automated.
So, IT is part of the value chain. It's exciting to not only support these things but to be the fundamental enabler of the technology platform that enables these new business models.
How has the CIO role and IT evolved?
IT needs to talk about business outcomes. It's not just about providing a solution here or education there. It's not about operating infrastructure. It's about business outcomes that we can drive with our activities.
In the cloud, CIOs can get rid of commodity services to focus on the whole value chain of their company. It's not about the data center or operations.
If you go to an infrastructure-as-a-service provider and get rid of your infrastructure, you free up mental capacity. That's important so you can spend valuable time on differentiating for the company. That was just one example with regards to infrastructure-as-a-service. You need to focus on the value you deliver as a company.
Our key purpose for the IT organization is to enable SAP to become a digital enterprise with happy end-users.
What does a real digital enterprise mean? I always refer to digital business processes and new digital business models. On the other hand, the digital workplace; considering how people work.
At SAP, we have more than 190 locations with 86,000 employees around the globe. We bring them together connect them because I fundamentally believe that innovation only happens by connecting a diverse set of people. IT has a huge role making this digital workplace happen for innovation at SAP.
All our functions, such as project delivery and IT support and operations, are customer-facing. They need to emphasize the end-user. When something's not working, they have a huge pressure point because they also serve our customers.
Which means, are you ensuring that the IT organization has empathy to serve our employees? It needs to [be in] the best possible way because the employees are in a pressure situation as well. This is a very important topic.
What are your guiding principles to enable business-focused IT?
User-centricity is one principle, which is key. The next principle, which is also very important, is Agile.
When I talk about Agile, it's not purely about project methodology. I also talk about the culture around it - from a mindset perspective, that you are adapting to change and reacting positively to change. Especially for the IT organization, [that is] very important because the business we are in an exciting market these days with changing business models.
We cannot say, "We will work on this project for the next year, and then have an outcome." That will not work. We need quick results and business outcomes on the one hand, and on the other hand, when something's changing, we need to react in a very positive way and make that also work.
So, user-centricity and Agile are key. Then, there is the cloud: Here, again, it is not just cloud for the sake of having the cloud. It's about quickly delivering innovations and value to our end-users. That's also an important key element. And, with those, we have guiding principles for driving the IT organization
Every IT organization should also never forget rock-solid operations. Stable operations are the key for every single company in the world. We need to ensure business operations. That's the foundation on which we build our innovations.
If stable operations are not in place, nobody will thank you for the innovations because you need to get that right. It's even more important to have in place the right working models; operating models. To have stable operations so that you can focus on innovations, on value delivery, for your business.
Enterprise architecture is a key asset every IT organization needs to have. Having a plan to transition from today's world into the new world, into tomorrow. It compromises the application architecture but also data architecture [with] roles and processes because, at the end of the day, you want to talk about business capabilities.
Business capabilities are the anchor point where you talk about your lines of business. That's what they understand, and that's what you should improve. Business capability. And the business capability itself is set up with different applications, data models, and data points to meet specific business capabilities and processes. We need to go away from an application or IT-centric discussion.
Every IT organization has the challenge of providing stable systems and operations while driving quick and agile innovation. I think this is something every IT organization faces. Architecture is the essential driver for that success.
You're one of the few Fortune-500 Millennial CIOs. Tell us about that?
If you talk about Millennials, it's not about age. That's very important for me. It's not about age.
It's about a different kind of mindset and thinking coming into the workforce. Having a different level of how you serve your end-users, how you serve your customers, how you want to deal with innovation, how you want to adopt innovations quickly. Millennials have a huge interest in getting innovations out the door
We need to provide a digital workplace; to be able to work everywhere, anytime, wherever you are, in the best possible way. I believe a different mindset is now coming into organizations, and that's the prime factor. It's not age.
I believe the new workforce will change how companies function. You need to think about different leadership skills. From a mindset perspective, this will push into every single level of the company.
CXOTALK brings you the world's most innovative business leaders, authors, and analysts for in-depth discussion unavailable anywhere else. Thank you to SAP for being a CXOTALK underwriter.