I was at a confab that IBM threw this week at its Watson Health unit in Cambridge, Mass. The show was called the Genius of Things Analyst Program. A lot of it was tied to Maximo, the IBM enterprise asset management solution, which pulls together information from the various “things” in the Internet of Things (IoT). But what struck me was how enterprise buying behavior has changed in the past few years.
You might remember when the term Chief Information Officer (CIO) first became a thing. In the late 1990s, the former manager of IT gained a title at the vice presidential level and became an officer of the company. The CIO conferred with the CEO about making information technology the core of the company’s value proposition, and budgets for such grand projects sometimes ran into the tens and even hundreds of millions of dollars. Much of that money went to buying expensive hardware and staffing sufficient software expertise to create the huge enterprise installations that would run these visionary systems.
Then came the dot com bust in 2000, and along with it, the failure of many of these initiatives to achieve their goals. Cost overruns were enormous, and some projects never actually worked at all. Everything went back up on the table. The CIO was chastised, put in the dog house, and sent back down to the IT department to run operations and try to save some money.
Almost two decades later, the CIO is still mostly running operations while trying to recraft a strategic role in the organization. Meanwhile, the entire IT landscape has changed. The world that Deon Newman, chief marketing officer for IBM Watson Internet of Things, and Chris O’Connor, IBM General Manager, Watson IoT Offerings, described bears scant resemblance to the one that existed at the turn of the century.
In their introductory remarks, they talked about how most of their buyers today are not IT executives at all, but rather the heads of operating departments, people who actually use the systems rather than build them. Although the IBM execs spoke about it almost blithely, as in — “What else? Why would you expect anything different?” — the shift in where the IT budget money is coming from represents a sea change.
The reason is that the buying of IT capabilities is rapidly moving from expensive, dedicated resources to services run in the cloud, and if an operating department doesn’t have to pay for and worry about new hardware and software to be maintained, then the financial sips they have to take are much smaller. The project chunks are more bite size. The department can afford to buy its own IT as a service, relying on the expertise of the cloud provider, which itself deals directly with the hardware and software suppliers.
Buyers can focus on the capabilities they want rather than the mechanisms that produce them. Even the base thinking among enterprise customers has changed. O’Connor talked about one customer, Kone (pronounced “cone-aye”), which no longer thinks of itself so much as a manufacturer of elevators and escalators, but instead as a service-delivery organization, a “people mover.” So, rather than dump a chunk of metal on some loading dock, the company now worries about improving the people-moving experience, which has led it to instrument its products with sensors that feed smart systems that can help reduce passenger waiting times and flag maintenance issues before they become serious enough to take a piece of equipment offline for days.
Guest speaker Jack Skelton, senior vice president of operations at Republic Parking System, whose customers include airports, stadiums, hospitals, and cities, described his relationship with IT this way: “We deal directly with customers and drag IT along when we have to.” That’s a far cry from the CIO-as-demigod of yesteryear.
As we progress from the era of dedicated systems and networks to a more flexible regime of cloud services, the definition of the network itself is expanding to include a whole raft of “things” at the periphery — elevators, cars, parking meters, shopping carts, thermostats, drilling equipment, drones, irrigation rigs, airplanes, generators, lighting systems, and so on ad infinitum. And IBM is hooking all these elements together with intelligence from cloud services like Watson and weather.com to deliver clients useful insights and improve business processes. Not IT processes. Business processes.
O’Connor noted that along with an active switch to software-as-a-service (SaaS), which involves IT less, IBM is seeing most customers head for “dedicated” SaaS, which looks like a cloud service, but involves dedicated hardware and software resources run in the cloud by the cloud provider. As he put it, “IT is not leading the discussion. We let the C-suite execs bring in the IT department.”