hitachi-forbes-cios-guide-to-digital-transformation

IN ASSOCIATION WITH:
CIO’s Guide to
Digital Transformation:
WHY DATA HOLDS THE KEY TO SUCCESS

DIGITAL TRANSFORMATION | 2
Copyright © 2016 Forbes Insights
TABLE OF
CONTENTS
Introduction
CHAPTER 1
The Business Benefits of Transformation
CHAPTER 2
Top Considerations for CIOs
CHAPTER 3
The New CIO
CHAPTER 4
Five Keys to Digital Transformation Success
CHAPTER 5
The Future Is Now
Acknowledgments

Digital transformation is top of mind for CIOs
and business leaders for clear and practical
reasons. It offers an opportunity to create new
revenue streams and meet changing customer demands,
as well as a way to address the rise of digital insurgents
trying to hijack core markets.
Unfortunately, while the potential of digital transformation
is great, so too are the challenges for established companies.
In one study,89% of CIOs said that in addition to generating
opportunities, moving to the digital world creates new,
vastly different and higher levels of risk1
. Adding to the
challenge, enterprise leaders don’t have proven models that
guide disruptive change.While best practices are emerging,
CIOs must create transition road maps that accommodate
their organizations’ unique needs rather than expecting
ready answers. Finally, incumbents are at a disadvantage
compared with startups and market insurgents that enjoy the
luxury of greenfield operations. Incumbents run significant
existing IT operations that continue to provide value and
must be blended with transformation cornerstones such as
cloud, mobile and analytic technologies.
Nevertheless, the competitive pressure to act will only
get stronger in the months ahead. “Are we going to see
more or less digitalization over the next three years? Of
course, the answer is more,” says Ravi Kalakota, partner
at LiquidHub, a consulting company that specializes
in business and digital transformation. “Millennials
want products and services delivered to them in new
ways. They increasingly interact with firms through
a mix of digital channels, and they are adopting mobile
app-based interactions. This will increase the pressure on
corporations to evolve and change.”
Against this backdrop, it’s become fashionable to talk about
“MILLENNIALS WANT PRODUCTS AND
SERVICES DELIVERED TO THEM IN NEW
WAYS. THEY INCREASINGLY INTERACT
WITH FIRMS THROUGH A MIX OF DIGITAL
CHANNELS, AND THEY ARE ADOPTING
MOBILE APP-BASED INTERACTIONS.
THIS WILL INCREASE THE PRESSURE ON
CORPORATIONS TO EVOLVE AND CHANGE.”
— Ravi Kalakota | Partner, LiquidHub
bimodal or two-speed IT, where CIOs essentially oversee
two separate types of operations with quite different cultures.
In this model, one group works “to keep the lights on” by
serving a traditional IT management and maintenance role
for legacy investments. Here, success in established business
processes continues to be measured by high availability and
low risk for problems such as security breaches. A second
group adopts the “fail fast, learn quickly, move forward”
mantra,similar to the entrepreneurial orientation of market
insurgents.
On paper, this two-pronged approach looks attractive, but
in reality it creates unnecessary boundaries for organizations
thatalreadystrugglewithpoorcollaborationanddatasharing
among departments. Another problem: this separation of
powers focuses too much on IT – transformation pioneers
are learning that success is achieved less by technology itself
and more by close relationships among change-minded
CIOs and line of business (LOB) leaders. “Modernization
can’t happen on the back of IT alone,”says Michael Mathews,
CIO of Deluxe Corp. “Transformation represents an
evolution of business processes.Without a close partnership
between IT and business,successful transformation just isn’t
going to happen.”
What’s needed is a common resource that both IT and
business managers intrinsically value, one that can guide
decisions about new business initiatives and related
technology investments. That rallying point is enterprise
data.Because incumbents possess richer reserves of business
information, they wield a competitive advantage that even
the most disruptive insurgents can’t claim. The key is for
established companies to unlock the full potential of this
important resource to fuel business transformation and
help to maintain their leadership positions in volatile and
quickly evolving markets.

THE BUSINESS
BENEFITS OF
TRANSFORMATION
1

“DATA HAS LONG BEEN COLLECTED,
MANAGED AND SECURED, BUT RARELY
HAS IT BEEN SEEN AS A BUSINESS
ASSET IN THE WAY IT IS VIEWED TODAY.
ENTERPRISES NOW RECOGNIZE THAT
DATA HAS A UNIQUE VALUE AND
CHARACTERISTICS THAT REQUIRE
SPECIAL CONSIDERATION.”
For example, by analyzing a blend of internal and
third-party data, established companies can spot changing
customer tastes to jumpstart new products and services.
“These insights can shorten time to market and create
more agile business processes,” he says.
Paul Lewis
Chief Technology Officer, Hitachi Data Systems

Data-driven digital transformation has the
potential not only to address competitive
threats posed by insurgents, but also to
uncover opportunities for new business models and
revenue streams. For example, a century ago Deluxe
Corp. launched a business that eventually turned the
company into a market leader for check manufacturing.
Better than anyone,Deluxe’s executives understand that
in a world of digital wallets, credit cards and Bitcoin,
consumers and businesses are writing fewer checks. So
Deluxe is disrupting itself. In recent years the company
made a bold move to become a provider of marketing
solutions and other services to help financial institutions
and small businesses operate more effectively and grow
their companies.
“Check usage remains an integral part of our business,
but we recognize consumption is in decline. At the same
time, we recognized we have a unique opportunity that
isn’t shared by anyone we compete with – we have a
trusted brand that’s been more than a hundred years in the
making,” Deluxe’s Mathews says.
This brand advantage gives Deluxe long-standing
relationships with more than 5,000 financial institutions
and 4.5 million small-business customers,all of which need
a raft of modern business services that Deluxe can provide.
“From that inflection point, we realized we needed to
make a move,” Mathews says.“And the result was a variety
of new offerings with a digital orientation.”
The ability to use and understand customer and market
data is an essential underpinning of Deluxe’s transformation
strategy, which draws from a large number of data
repositories and systems for managing and understanding
the information that Deluxe has gathered about its core
markets.“We’re working to create a single source of truth
around customers, products and vendors,” Mathews says.
Now, that extensive storehouse and a strategic acquisition
of a company that specializes in big data analytics are
serving two purposes.“We consume information internally
for decision making and for running our operations more
efficiently, but data and analytics are also products we are
offering to our financial-institution and small-business
customers,” Mathews explains.
For example, Deluxe monitors activity across new
e-commerce channels that it runs. “We see what types
of products consumers are buying online, how much
they’re buying and when they’re making their purchases,”
Mathews says. “Our internal teams spend considerable
time understanding how these consumers are engaging
with us and whether we’re providing the right products
for our customers at the right time. This helps us better
position our company in the marketplace.”
The ability to modernize business models in the face of
changing requirements isn’t the only value of data-driven
transformations. Companies across market segments are
seeing a host of other benefits.

ENHANCED
CUSTOMER EXPERIENCE
Retailers continue to address the changing
tastes of omni-channel shoppers, and the
challenge goes beyond a simplistic view
that consumers will choose between
online and in-store transactions. Shoppers
are blending both worlds. For example, a
consumer may start by browsing online
for boots, combing various sites to find
three pairs of interest. He’ll then go to the
company’s brick-and-mortar facility to
try them on, evaluate the fit and decide
to purchase two pairs. If one pair is out
of stock, the shopper can access an in-
store kiosk to arrange for the boots to
ship to his house for free. This series of
digital and in-store transactions represents
a transitory buying journey rather than
one that starts and finishes across a single
channel. Industry players who can follow
and understand these buying journeys are
best positioned to deliver experiences that
encourage sales and brand loyalty.
PROACTIVE
CUSTOMER ENGAGEMENT
By digging deeply into customer data, a
retail bank can anticipate the near-term
needs of individuals. Rather than waiting
for someone to contact the bank about a
new mortgage or student loan, predictive
analytics can flag these events based on
demographics and interactions with the
bank.“We have links to a number of data
sets, including credit bureaus,” Mathews
says. “We can help financial institutions
better understand changes in consumer
behavior, based on important life events.
As a result, institutions can make smarter
decisions about how to better serve their
customers at the time and place they need
it most.”
NEW UPSELLING AND
CROSS-SELLING
OPPORTUNITIES
By creating comprehensive views of
customer buying patterns and interests,
companies can deliver targeted offers that
appeal to individual needs versus sending
generic promotions that consumers ignore.
For example, before a telecommunications
company sends a monthly bill for mobile-
phone service, it can draw on underlying
data resources to spot patterns in the
customer’s Internet service or any other
products the company provides. It can
then include a bundling offer based on
these details that highlights cost savings,
new capabilities or loyalty rewards that
resonate with that particular client.
COMPETITIVE RESPONSES
TO INSURGENTS
Upstarts such as Uber and Airbnb are
redefining their respective markets with
new business models and proprietary
applications. This provides an initial first-
mover advantage for insurgents,but for the
long term,established companies can retain
their competitive position by nurturing
and capitalizing on their rich data reserves.
“Data has long been collected, managed
and secured, but rarely has it been seen
as a business asset in the way it is viewed
today,” says Paul Lewis, chief technology
officer for Hitachi Data Systems and an IT
executive with a long track record in other
verticals. “Enterprises now recognize that
data has a unique value and characteristics
that require special consideration.”

TOP CONSIDERATIONS
FOR CIOS2

“THE 85% OF THE IT BUDGET
THAT WE USED TO SPEND FOR
MAINTENANCE HAS NOW SHRUNK
TO 50% …[WHICH] GIVES US FUEL
FOR NEW OPTIMIZATIONS AND
MODERNIZATIONS.”
Dr. David Bray
CIO, U.S. Federal Communications Commission

The drive for digital transformation didn’t
suddenly fall into the laps of CIOs.It comes on
the heels of other trends that have been shaking
up the IT department for years.This includes recession-
era imperatives to “do more with less.”The push to cut
costs became severe enough that IT managers faced
tough decisions about cutting resources and investment
plans in the drive to achieve stringent financial goals.
In the post-recession world, goals are shifting as CEOs
place higher priorities on growth – whether through
mergers and acquisitions or organic gains in revenues
and markets – to satisfy shareholders and address threats
posed by insurgents. “This is pushing CEOs to ask,
‘How do we transform our organizations to compete
in the current competitive environment and continue
to grow our companies?’” Lewis says.
This puts CIOs in a difficult position. After years of
being pushed to reduce costs, they’re now being asked to
jumpstart innovation.“This shift is extraordinarily difficult,
and as CEOs continue to challenge IT leaders to be digital
innovators, that chasm is growing,” Kalakota says.“Going
from trying to keep the lights on to fundamental change
in the organization is tough.”
The U.S. Federal Communications Commission is one
large enterprise that is successfully balancing tight budgets
and transformation. In 2013, when Dr. David Bray arrived
as CIO, the agency was running more than 200 different
IT systems, all within in-house data centers and averaging
10 years old. Because of federal budget sequestration and
other cost-cutting requirements, the IT department was
essentially in a holding pattern – it received funds to keep
the existing infrastructure running (more than 85% of the
IT budget was going just to maintain legacy systems), but
lacked extras for new services. In addition, the IT team
was at half its historical size, as people who retired weren’t
being replaced.
One of Bray’s first jobs was to convince senior leaders that
a new operating model was needed to better support the
agency’s mission, resiliency and sustainability. But requests
for increased funding for modernization were denied in
both 2014 and 2015. “It quickly became clear that we
couldn’t continue to operate everything on-premise given
the funding we had,” Bray says. “So we decided to retire
some on-premise systems and move other services to the
cloud or to a commercial outsourcer that would take over
their care and feeding.”
To succeed with this bold plan, the then-new CIO had
to gain the trust of senior leaders and the IT staff. “Any
digital transformation is about knowing the history of the
organization, listening to all the various stakeholders and
working to understand each different perspective,” he says.
“We then developed a narrative that people could buy into
and begin to trust that there was a viable path forward.”
The upfront work didn’t overcome every obstacle but was
enough to demonstrate early successes.Today none of the
FCC’s IT runs internally. About a quarter of the legacy
systems were deemed obsolete and were decommissioned.
Another 30% of the old environment was replaced by
cloud services, with the remainder now being run by a
commercial outsourcer. The impact has been significant.
“The 85% of the IT budget that we used to spend for
maintenance has now shrunk to 50% by moving to the
cloud and a commercial service provider,” Bray reports.
“They can do patching and systems monitoring much
more effectively than we could. And while we didn’t
get a budget increase, reducing our maintenance spend
so significantly gives us fuel for new optimizations and
modernizations.”

THE
NEW CIO3

As Bray’s example shows, to undergo data-
driven digital transformation, enterprises need
a new type of leader,someone who can act as a
change agent across technology and business disciplines.
For many progressive organizations the person who’s
emerging to take on this responsibility is the CIO – but
in a role that rewrites traditional definitions.
The most notable change is that these modern CIOs are
becoming data specialists to drive business innovation, and
this is giving them new status within enterprise hierarchies.
“Traditionally, CIOs never had a seat at the CEO’s table,”
Lewis points out. “CIOs typically reported either to the
chief operating or chief financial officer, and therefore
acted primarily as a provider of services rather than as a
resource for helping to make business decisions.”
Data-driven business transformation is changing that.
CIOs now hold dual responsibilities as technology stewards
and expert advisors for using information and analytics
to better inform the business, improve the company’s
agility and employ technology to create enhanced client
experiences.
“I report to our CEO, which means I’m a peer with our
business-unit leaders,” Mathews says. “This sends a clear
message about the value of technology for the business.
As a change agent, I’m pushing for modernization and
tools that enable business teams to innovate faster, scale
the company to meet changing demands and integrate
acquired businesses more efficiently.”
Along with these added responsibilities, CIOs face
new considerations that impact their work. The most
fundamental change for many CIOs is a shift in their
own mindset. “I’ve witnessed some CIOs who want to
maintain their command-and-control responsibilities,”
Lewis says.“They reason that the consequences of risks –
from production breakdowns to security breaches – still fall
on their shoulders. However, there’s another segment I’ve
seen that says,‘Despite these risks, innovation represents a
higher priority.’They’re much more entrepreneurial than
risk-averse in their orientation.”

“CIOs cannot just maintain the status quo. In fact, I would submit that CIOs can’t even
do incrementalism, because with incrementalism you will fall behind, too,” says Bray.
In part that means adopting a strategic role in which CIOs work more closely with the
business to develop new services. But he warns that not everyone is ready for this new-
look CIO. Pushback will arise from end-users who question why it’s necessary to change
current operations or to do so quickly. Others may simply balk at seeing the CIO act as
more than just a chief IT officer.
“We have to be very careful about how we handle friction to keep it from endangering
our success,” Bray says.“You don’t want to create too much friction at once, or else you’ll
get killed. But at the same time, generating some friction is a sign of progress.After all, at
the end of the day, it’s friction that makes a car grab the road and move forward.”
Once these reorientations take place, the impact can be significant. For example,
Mathews says his work with LOB managers has made divisions almost imperceptible.
“Any transformation agenda, particularly when data is an underpinning, has to be done
in conjunction with the business,” he says. “If we’re not working closely together, we’ll
deliver poor outcomes.”
So channels are open to enable the business seeking help to address a new requirement or
for IT to extol the potential of a new technology. Either way, conversations ensue among
peers with a common goal.“This partnership gives us the best of both worlds,” Mathews
says.“The business becomes highly engaged with transformation, and the IT organization
understands its role and is willing to provide its voice to better serve the business and
customers.”
This cross-fertilization guided the modernization of Deluxe’s e-commerce platform and
the creation of new customer-facing products. “We created a richer online experience
that’s mobile-friendly and allows for greater personalization,” he explains.“The initiative
was driven by our business partners and IT.”

FIVE KEYS TO DIGITAL
TRANSFORMATION
SUCCESS
4

“IT’S NOT A QUESTION OF HAVING THE
‘INNOVATIVE’ PEOPLE WORK OVER
HERE AND EVERYBODY ELSE GO
ABOUT THEIR BUSINESS. INNOVATION
NEEDS TO BE NURTURED WHEREVER
YOU FIND IT. THAT’S WHY IT’S SO
IMPORTANT TO INSTILL A CULTURE
OF INNOVATION. CULTURE BEATS
STRATEGY EVERY DAY OF THE WEEK.”
Of course, digital transformation requires more than just changing org
charts and mindsets. Once organizations make a strategic commitment
to modernization, they must take a series of tactical steps to create a
solid foundation. Transformation practitioners say the following five
steps can put enterprises on the right path.
C Scott Frisbie
Executive Vice President and Head of Innovation Design,
Wells Fargo

“When it comes to change, we hear a lot
about ‘moving to’ the cloud or to new
platforms,” Lewis says. “But realistically,
companies aren’t moving anything, they’re
diversifying their operations.”
That’s because established companies will
continue to run many of the proven systems
that helped make them market leaders in
the first place.“If there’s a line-of-business
system that lands planes or manages ATMs,
it’s likely to remain in its traditional
operating mode,” Lewis explains. “It’s not
in the organization’s best interest to create
an innovative environment to replace a
system that keeps critical operations from
going down.”
By contrast, new applications and services
will likely support emerging business needs
with the help of mobile, cloud, social and
analytics applications. “Some of my lines
of business need to be far more agile than
traditional functions, and therefore I’m
going to treat them differently,”Lewis says.
But meeting the unique requirements of
different business lines shouldn’t come
1 EVOLVE BEYOND
BIMODAL THINKING
at the expense of cross-department
collaboration and data sharing. Rather
than creating rigid mode-1 and mode-
2 boundaries, CIOs need to create a
common framework that avoids silos.
“The biggest priority is to get everyone
engaged,” says C Scott Frisbie, executive
vice president and head of innovation
design atWells Fargo.“It’s not a question of
having the ‘innovative’ people work over
here and everybody else go about their
business. Innovation needs to be nurtured
wherever you find it, and you never know
where the next innovative thought is going
to come from.That’s why it’s so important
to instill a culture of innovation. Culture
beats strategy every day of the week.”
To do this, Wells Fargo launched an
innovation group, which includes input
from both technology and business people.
In addition to undertaking related R&D,
the group disseminates innovation best
practices throughout the enterprise.
The group is led by Steve Ellis, who
spreads a KYC (know your customer)
mantra. “That’s the message we’re trying
to inculcate throughout the enterprise,”
Frisbie says. “By being guided by our
customers and their expectations related
to technology, we can better understand
what new capabilities we should be
offering. This is also helping us be open
to experimentation and innovation to a
degree we have not been before.”
IT leaders across all types of industries
are seeing similar trends. “Especially
for consumer-oriented companies, it is
extremely important for IT to get ahead
of the pace of change in terms of the
products and services it provides,” says
Alan Boehme, chief technology officer
and chief innovation officer at the Coca-
Cola Co. “More importantly, it needs to
get ahead of where consumers are going
because they’re driving change at a faster
and faster rate.”
“IT IS EXTREMELY IMPORTANT FOR IT TO GET AHEAD OF THE
PACE OF CHANGE IN TERMS OF THE PRODUCTS AND SERVICES IT
PROVIDES. MORE IMPORTANTLY, IT NEEDS TO GET AHEAD OF WHERE
CONSUMERS ARE GOING BECAUSE THEY’RE DRIVING CHANGE AT A
FASTER AND FASTER RATE.”
— Alan Boehme | CTO, Chief Innovation Officer, Coca-Cola Co.

The IT staff first needs to perform an
accurate inventory of legacy assets to
determine which ones continue to provide
value for core business processes, and
which ones are ripe for consolidation or
replacement with more-efficient resources.
Next comes a gap analysis that looks at
demands by the business for new services
and what investments IT must make to
meet those needs and support a data-
centric strategy.When deciding on funding
priorities, a top goal should be business
elasticity. “Organizations can’t always
predict demand cycles or usage patterns in
a world where clients are worldwide and
access resources 24/7 by 365,”Lewis points
out. “Therefore, enterprises need elastic
operations so that no matter what happens,
they can scale up or down depending on
the prevailing conditions.”
One example is Coca-Cola’s effort to
optimize the distribution supply chain
in Vietnam, where local suppliers are
scheduled to visit a series of small mom-
and-pop stores a couple of times a week
to see if they need more product. “An
2 DESIGN AN INFRASTRUCTURE
FOR INNOVATION
individual store may receive a visit on
Tuesdays and Fridays, but what happens if
they sell out of a product on Wednesday?”
Boehme says. “We’re not making any
money, and the shop owner isn’t making
money, because there’s no product to sell.”
Working with Bringg, a startup that offers
a cloud-based delivery-services solution,
Coca-Cola rolled out an Uber-like
application in about 45 days that mitigates
out-of-stock situations. The company
created a mobile phone app that connects
shop owners and local distributors with
the Bringg service.When a stock shortage
arises, owners simply tap an on-screen
icon, enter the desired replacement
quantity and press send to place the order.
“The distributor then uses the service
to find a local, preapproved driver with
a small vehicle and says, ‘Here’s a case of
Coke, deliver it to this address,” Boehme
explains. “The distributor can then send
a message to the shop owner with the
estimated delivery time and even display
a map that shows where the driver is at
any point in time. Instead of taking two
to three days to deliver a product, it’s now
down to hours or minutes.”
Driven by this on-demand orientation,
CIOs are turning to the cloud. Closely
related to these moves is the need for IT
managers to work jointly with finance
executives to transition from capital-
expense to operating-expense budgets.
Opex funding helps CIOs avoid some
traditional costs associated with over
investing in capital equipment. The
reasoning was that excess capacity was
necessary for unexpected demand spikes,
but in reality, these extra resources spent
most of the time being underutilized.
However, being a hardened budget hawk
presented its own risks.“Not being able to
handle a sudden surge in customer traffic
is worse than having too much capacity,”
Lewis says,adding that service outages may
not only temporarily keep transactions
from taking place, but they could also
permanently damage relationships with
key customers. Thus, predictable opex
spending tied to on-demand IT capabilities
helps enterprises match funding and
service-level goals.
As CIOs create infrastructures that balance
support for existing operations and on-
demand realities, they’re faced with a
fundamental challenge: how to succeed
in both areas simultaneously. Deluxe’s
Mathews found an answer. “From a
technology perspective, we’ve adopted a
simple approach – we don’t do wholesale
rip and replace of systems or architectures,”
he says.“Instead,we modernize rapidly but
incrementally when we update individual
systems or processes. In this way, we
transform with greater clarity and with
much less risk than if we tried to replace
an entire process flow or architecture
within the enterprise.”

TRANSFORMATION
CREATES NEW
FUNDING ALLIANCES
IT departments continue to see plateaus in budgets or only modest
increases each year. So how can CIOs fund innovation?
Help comes from an unexpected source: so-called shadow IT. This
refers to business units that use departmental budgets to acquire new
IT services.For example,a business manager may bypass IT and sign up
for a particular Software-as-a-Service application deemed important
for the department. Because of the lack of IT oversight and control,
shadow IT is often seen as a risk and thus something to be avoided – at
least from a CIO’s point of view. But not all IT leaders feel this way.
“Many CIOs clearly understand that most, if not all, of the money for
new investments is coming from a business unit, and therefore they’re
willing to enable shadow IT,” says Paul Lewis, CTO of Hitachi Data
Systems.
But they’re not completely laissez-faire, he adds. Instead, these CIOs
provide a platform for data governance that is compliant with internal
and regulatory policies.Thus, IT ensures that data access is controlled
in a way that allows the business to focus on creating value.
“I’m a big proponent of enabling shadow IT,” Lewis says. “My job
becomes less about managing a project and more about creating a
foundation that the business can use to access data and create insight.
That can be much more valuable than just giving them an application
and hoping it is going to be used.”

While cloud,mobile and social technology garner a lot of attention during modernization
discussions, data-driven transformations require new resources for making information
portable across departments and available to business users whenever they need it.
To do this, progressive organizations are rounding out traditional data warehouses and
data marts, which house enterprise information that fits within well-defined schemas. For
example, this is enterprise data that can be grouped by customer, product, price or other
characteristic.The new, complementary resource is the data lake, which applies tools for
data visualization and integration to unstructured data,such as messages from social-media
interactions, videos and streams from Internet of Things (IoT) applications.
Enterprise data warehouses and data marts, plus their associated BI tools, will continue to
generate details that remain valuable to business operations.But these traditional resources
require batch operations and hours or even days to generate reports. However, data lakes
are designed for speed – an enterprise can access data lakes in near real time for faster
insights.The key is being able to blend warehouses, marts and lakes, along with source
databases and external information.Together, all of these information sources provide a
complete view of markets, customers, business trends and internal operations.
“We’re engaged in just about everything that you can associate with the word ‘data,’
including data lakes,” Frisbie says.“But the goal isn’t to just collect data, we also have to
integrate as well as federate it.And then the real work begins with the analytics.”
BlackRock,the global asset management company,is leveraging digital capabilities to help
it foster more personalized and closer engagements with customers.“Digital transformation
in the marketing organization helps us to better understand and connect with our clients,”
says Scott Roen, managing director and global head of digital at BlackRock.
3 CAPITALIZE ON NEW DATA
MANAGEMENT TECHNOLOGY
Deluxe is also among the growing list of companies that are evaluating the value of data
lakes.“They can give us a different way to take advantage of the data we collect,”Mathews
says.“We still have significant call center operations,and we receive high volumes of online
traffic from small businesses. Our job is figuring out how to harness all that structured
and unstructured information and to leverage it for making better business decisions and
helping customers achieve better outcomes.”

A data-driven culture staffed by innovation-
oriented professionals often requires new
talent with a combination of business
and technical skills. Lewis suggests that
companies hire a leader dedicated to
supportingnewbusinessinitiatives,someone
who is comfortable with experimentation
and failing fast.“This is a different skill set
from the 30-year IT veteran focused on risk
avoidance,” he says.
Transformation agents must also be adept
at interacting with the business. “These
innovators can’t wait for someone to tell
them what to do, they have to figure what
can be useful and then help the business
understand why,” Kalakota adds.
Behind the scenes, BlackRock leaders are
re-engineering workflows for data-driven
interactions among marketers and clients.To
facilitatetheseefforts,thecompanyisbringing
on new talent and updating the skills of some
current staff members to help them work
more effectively in a digital environment.
“We now have individuals who are
4 ADDRESS SKILLS GAPS THAT CAN
STALL TRANSFORMATION EFFORTS
writing rules-based algorithms to help us
better understand the customer journey
to ensure that each person receives the
right communication through the right
marketing channel at the right time,”Roen
says.
Their skills include a blend of technology
expertise and marketing savvy, along
with a keen interest in the underlying
infrastructure for managing and analyzing
data. In addition, data experts are playing a
bigger role in marketing than in the past.
“I see many data scientists and developers
who are interested in the marketing side of
the business,” Roen says.
Data-driven transformation is giving rise
to another new role: the chief data officer
(CDO) or vice president of data. His or
her responsibilities range from data storage
and security to analytics, data stewardship,
data architectures and business intelligence.
This officer also sets policies for managing
structured and unstructured data, as well as
machine-generated information.
But one of the most important
responsibilities is guiding changes in data
governance brought on by transformation.
“The traditional view is that those who
control the data have the most power
within the company,” Kalakota says.
“Governance is about breaking down
those barriers.”
The CDO must elevate governance to
become a more complex discipline that’s
influenced not only by the IT department
– the traditional center of governance
responsibility – but also by LOB input.
“We’re working through the evolution
of data stewardship and governance to
determine who actually owns the data
within our company,”Mathews says.“In the
process,all those responsible are helping to
shape who can have access to data and then
how we can make information available
to authorized business users, partners and
customers based on the security policies
that we’ve created.”
“I SEE MANY DATA SCIENTISTS AND DEVELOPERS WHO ARE
INTERESTED IN THE MARKETING SIDE OF THE BUSINESS.”
— Scott Roen | Managing Director and Global Head of Digital, BlackRock

Fueled by the pressure to innovate, many
enterprises try to change too much, too
soon, transformation experts say.“When an
organization starts to create new analytics
programs, for example, they tend to jump
right in to the most difficult cases,” Lewis
reports. “So they may launch a big data
exploration thinking they’ll find a nugget
of gold if they just keep trying hundreds of
algorithms.”
A better approach is to start with a project
that promises quick wins and demonstrable
results.“That might be a plan to optimize a
data warehouse by moving the unstructured
data that was mistakenly put into it to a data
lake,” Lewis says.
Kalakota concurs. “CIOs have to be very
focused on driving wins because without
5 FOCUS INITIAL TRANSFORMATION INITIATIVES
WHERE THEY’LL HAVE THE MOST IMPACT
that, their job security is at stake,” he warns.
“To drive wins, you have to narrow down
the focus of what you do and then stay
focused. That means finding projects that
have a clear beginning and end,and that can
create clear value.”
One LiquidHub strategy is to work with
companies to address one business silo at
a time. “It’s one thing to say you need to
transform the customer’s relationship across
the entire bank.That’s an important long-
term goal,” Kalakota says. “But first focus
on fully knowing a customer’s relationship
to one area, such as retail banking. There
are many opportunities for adding value
by putting yourself in the customer’s shoes
and personalizing the interactions. Moving
from a transaction mindset to an outcome-
oriented mindset takes time.”

THE FUTURE
IS NOW5

IOT AND OTHER EVOLVING TECHNOLOGIES
WILL ONLY HEIGHTEN THE IMPORTANCE OF
ENTERPRISE DATA. AS A RESULT, THE FUTURE
SUCCESS OF ESTABLISHED BUSINESSES
WILL HINGE EVEN MORE ON HOW THEY
TURN INFORMATION INTO A COMPETITIVE
DIFFERENTIATOR. GUIDED BY MODERN CIOS,
SKILLED TALENT AND AN AGILE, ON-DEMAND
IT ENVIRONMENT, DATA-DRIVEN COMPANIES
ARE BUILDING A STRONG FOUNDATION FOR
LONG-TERM SUCCESS.

ADVICE FROM TRANSFORMATION PIONEERS
DON’T DISRUPT,
DIVERSIFY
The challenge: In the rush to
transform, some established
companies fail to fully exploit
valuable corporate resources,
including rich storehouses of
customer and market data and
proven IT systems.
The plan: Upgrade core
line-of-business systems, while
supporting new business
initiatives with mobile, cloud,
social and data analytics
applications.
The key:CIOs must promote
a culture of cross-departmental
collaboration and data sharing
to break down rigid boundaries
between traditional and
transformational work groups.
START WITH AN
ACCURATE BASELINE
The challenge: Identify which
legacy systems continue to
provide value and which ones
impair business agility because of
high maintenance costs, complex
customizations and outdated
capabilities.
The plan:Audit IT assets with
an eye toward financial costs
and value to the business.
Where appropriate, consolidate
or replace old systems.Then
perform a gap analysis that looks
at demands by the business for
new services and the investments
needed to meet those needs and
support a data-centric strategy.
The key: Prioritize new projects
according to their potential to
create business elasticity.This
enables enterprises to quickly
scale up or down as demand
cycles constantly change for
business systems that must be
available 24/7 by 365.
TAKE ADVANTAGE
OF MODERN DATA-
MANAGEMENT TOOLS
The challenge: Data-driven
transformation projects require
new resources for making
information portable across
departments and available to
business users whenever they
need it.
The plan: Round out traditional
data warehouses and data marts
with new and complementary
resources, such as data lakes.
These innovative options include
data visualization and integration
tools for unstructured data and
information streaming from IoT
applications.
The key: CIOs must blend
warehouses, marts and lakes,
along with source databases and
external information, to achieve
a complete view of markets,
customers, business trends and
internal operations.
HUNT FOR NEW TALENT
The challenge: Data-driven
transformation requires new skill
sets, including an entrepreneurial
outlook that embraces the idea of
“failing fast, learning quickly and
moving forward.”
The plan:Appoint an innovation
leader who is comfortable with
change, experimentation and
taking on risk.
The key:Transformation agents
must be adept at interacting with
the business. Innovators can’t wait
for LOB managers to identify
a new opportunity; they should
recognize the value of a new
service or technology and then
help the business understand its
importance.
FOCUS ON QUICK WINS
The challenge: Fueled by the
pressure to innovate, enterprises
may try to change too much, too
soon, which can make it difficult
to demonstrate the business value
of new investments.
The plan: Start with well-defined
projects that promise quick wins
and demonstrable results.
The key:Without a clear focus
and meaningful results, CIOs will
quickly lose the backing of senior
management and may even see
their jobs at stake.

HOW TO QUANTIFY
THE ROI OF
TRANSFORMATION
“Fail fast, learn quickly and move forward” may be the mantra for
many change agents, but in a highly dynamic environment, how can
CIOs make the business case for their specific transformation projects?
IT leaders acknowledge that traditional ROI calculations don’t
always apply in a world of digital disruption. “The official answer is,
‘Of course everything we do has a clear business case,’” says C Scott
Frisbie,executive vice president and head of innovation design atWells
Fargo. “But one of the lessons we’ve learned is that not everything
can be quantified.That’s because sometimes when you start down a
modernization path,you don’t always know what you’re going to find.
An unanticipated business benefit may result for a group that wasn’t
directly involved in the project, for example.”
Rather than establishing traditional KPIs at the start of an initiative,
some corporations take a broader view when prioritizing new
investments. “We do a full financial analysis before we commit
to a new project, so we’re going in with our eyes wide open,” says
Alan Boehme, chief technology officer and chief innovation officer
at Coca-Cola. “But even so, we may ultimately decide to increase
our operating expenses if we believe that the non-financial returns
outweigh the cost – for example, if we decide the effort will give us
a competitive advantage, help grow our business, improve customer
satisfaction or optimize our supply chain.”

At a time when data is taking on a greater role as a strategic
asset for large enterprises, Hitachi Data Systems provides
a combination of resources to optimize information
management and support transformation projects.
The extensive Hitachi portfolio includes the industry’s first data-
independent infrastructure, cloud services and analytics, along with a
data management platform that was given a top rating by Gartner,and
an enterprise object store rated highest in the market by both Gartner
and IDC. These and other capabilities help CIOs create a modern
A NOTE FROM OUR SPONSOR
A PROVEN PARTNER FOR
DIGITAL TRANSFORMATION
environment for managing,governing,mobilizing and analyzing data.
What’s more, innovative technologies, such as Hitachi’s pioneering
development of data lakes, integrate a wide range of information
formats, from structured and unstructured data to high volumes of
Internet of Things information.
For details about how Hitachi’s expertise can help
companies use data as a strategic resource and support
business transformation, go to www.hds.com.

ACKNOWLEDGMENTS
Forbes Insights and Hitachi Data Systems would like
to thank the following individuals for their time and expertise:
Alan Boehme, Chief Technology Officer, Chief Innovation Officer, Coca-Cola Co.
Dr. David Bray, CIO, U.S. Federal Communications Commission
C Scott Frisbie, Executive Vice President and Head of Innovation Design, Wells Fargo
Ravi Kalakota, Partner, LiquidHub
Paul Lewis, Chief Technology Officer, Hitachi Data Systems
Michael Mathews, CIO, Deluxe Corp.
Scott Roen, Managing Director and Global Head of Digital, BlackRock
Hitachi Data Systems builds information management and Social Innovation solutions for business and social prosperity.
Our IT solutions and services drive strategic management and analysis of the world’s data. Only HDS integrates the best
of Hitachi IT and operational technology to deliver the insight that businesses need to thrive. HDS.com
1
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