A few months ago, Steve Rogers, Director of the IBM Center for Applied Insights, had a great discussion with Frank DiGilio, Distinguished Engineer and Chief Architect for IBM Cloud. Previously, we shared their discussion about collaboration and partnering. Today, we’re focusing on the the role of social and cloud for competitive advantage.
Steve Rogers: Frank, have you seen Cloud change the dynamic, the boundaries, the rules of the road, or even the business models in certain industries?
Frank DeGilio: Yes. I think that Cloud is the only way, in this day and age, for you to be able to be not just agile but to be able to provide service in the most personal way possible.
Let’s use Facebook as an example. Facebook is really good about mining the data that they get in the things that you type. Right in the stuff that you’re freely giving of who you are, they get information so that they can change their advertising. And their advertising becomes more and more specific to the things that they know that you’re interested in. There are a lot of people who say oh this is horrible. This is a privacy issue. This is the, you know, the end of civilization as we know it or whatever.
But think about this: back before the Industrial Revolution people who would sell you things would know you. And they would sell things to you that they know you needed or knew that you wanted. It was probably more craftsman oriented, but the people who sold to you knew you because they were your neighbors.
That type of model is coming back in this business space, right? The online people who sell you things — the Amazons, the Facebook who advertises — are getting to know who you are by what you say and what you buy and what you do. So, they can more effectively provide you connections to the things that you’re most likely interested in buying.
To me, that’s the future here. That’s the business model that Cloud is really going after. I need to be able to have analytics that point directly to who I am and what I want. And it’s providing an infrastructure that allows businesses to be that hyper specific in how I get to the people who are most likely to buy the things that I want to sell.
Steve Rogers: You know, it’s interesting you say that. One of the findings from this study when we looked at pacesetters, leaders in adoption and driving competitive advantage through Cloud . They were using those Cloud capabilities to strategically reinvent and make better decisions and collaborate more deeply.
For example, through Cloud , these pacesetters were 136% more likely than chasers, which is sort of the laggard group, to reinvent customer relationships. And as I listened to you in that last example that’s precisely what you’re saying it’s the personalization and the getting to know you aspect. Given that, how does this impact effect what CMOs should be thinking about when they use Cloud ? Do you have additional examples of CMOs using Cloud well?
Frank DeGilio: Well it’s interesting that you say it that way, and we talked about in the very beginning this idea of a partnership.
I believe what we’re getting to is a point where CMOs and CIOs become partners in this space because before a CMO would say, okay, I’m going to get this piece of data and they’re going to leverage that piece of data to figure out how do I market to this group better or is there a group of people that I really am missing? But all of those things begin with the CMO saying I want to do this or I have this idea and I use the data to validate it.
And I think what happens is as I get a closer relationship between the CMO and the IT, the CIO kind of perspective, is that I start letting the data lead as opposed to me starting with an idea and getting data to validate it. So, if I can get trends up front I start to change that model. And that’s a really significant change because it goes from “I have an idea let me prove it” to “the data is leading us this way we should think about how we do this.”
And it’s the preconceived notions how do I change that?
Let me give you an example. My daughter is in college. And she is using a bank that has a branch in her college, which is cool because everything is right there. But it has hours that are not always matched to a college person’s lifestyle because it’s more like traditional banking…
Steve Rogers: You mean they’re not open at 3:00 AM?
Frank DeGilio: Yes – not open at 3:00 AM. Go figure.
Steve Rogers: Yes.
Frank DeGilio: So, in one moment when she was particularly frustrated, she tweeted to her friends that this particular bank sucks, or something. You know, how the kids these days talk. Anyway, within the hour the bank had gotten back to her personally because of her tweet, right? That’s the data leading not the CMO saying we’ve got to figure out how to get to these kids better.
It’s the CMO or that organization saying oh look I see something here how do I deal with this, how do I change the way I market to these or how to change the way I do things because these are the kinds of things that the data is leading me to which I think is an important change.
Steve Rogers: Yes. Yes I mean this whole notion of data led marketing is sort of I think what you’re describing is marketing science and the rise of the data scientist and informing marketing is an interesting avenue.
And I think that has to come not from the CMO, because business people’s understanding of how the infrastructure makes those things is not interesting. But the CIO or the IT side has to be able to say, okay how do we connect to what’s going on to provide a good stream of data to marketing?
And, again, this is what’s interesting and the reason Cloud is so cool is that none of this talks about infrastructure. If you look at how you talked about chasers as opposed to pacesetters. What are the chasers doing? They’re still thinking about infrastructure. They’re still spending 75, 80 cents of every dollar on maintaining an infrastructure and keeping things working right? Not that it isn’t important to keep things working, it’s very important to keep things working, but the pacesetters are thinking about, how do I maintain new streams of business? How do I come up with new ways of getting the data to the business? How do I come up with new ways of offering a capability that I’ve never been able to do before?
And because they’re not bound by creating their own whatever and now they’re saying, how do I leverage the technology and make it work? I was working with a major technology business recently and the CTO said to me, “Frank, I just don’t want to think about infrastructure anymore.” Now this is a CTO who’s saying I don’t want to think about the technology anymore I want it to just work.
That’s a Cloud pacesetter. I don’t want to be mired in stuff that I don’t need any more and not that you’re not going to need computers — you do — but you don’t need to provide every service yourself. What you need to do is say, how do I broker all that’s available out there? How do I vet the right providers? How do I then use those providers in the appropriate places? And where they don’t have stuff, I may have to do it myself. But the stuff that I do myself is only focused on my competitive advantage.
It’s just how a business would say, “I’m doing too many other things. I’m just going to do what’s my core business. What’s my real business value? I’m going to focus on that.” That’s what IT should be doing. IT should be saying I’m not going to provide everything. I’m going to provide where my value is. And I’m going to leverage other people and places where they can do it just as well or maybe even better.
Steve Rogers: Absolutely. Absolutely and, you know, it’s interesting combining that last thought along with your bank example. We found pacesetters were 170% more likely than chasers to use Cloud-based analytics to drive insights from things like big data and, it gets at this question of how am I going to create streams of competitive advantage?