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Preparing for the Unknowns of Disruption

Posted on August 9, 2017 by Innovation Executive Forum

Introduction:

It’s time IT leaders got their act together and started planning for the “known unknowns” as well as the “unknown unknowns” coming their way. This was the message that emerged at our annual IEF stop in Calgary, a city rich with oil and energetic ideas. From taking steps to prepare your workers for the disruption of automation, to deciding whether you need to buy insurance for ransomware, our panel of CIO’s, IT Directors and their peers shed light on the many challenges of being in the dark.

1. Preparing your workers for an unknown future

Ever since the invention of looms, the steam engine, and automobiles, we’ve fretted over the devastation new technologies pose to disrupted industries: the destruction of jobs.

One IEF leader from a municipal gas company put this fear into a modern context, saying automation, Radio-frequency identification (RFID) chips, and mobile innovations are decimating the cost of reading residential meters, and putting jobs on the line as a result.

“That efficiency is a gain for the enterprise, but it also means we do not need as many employees in the field,” he said.

Today these fears are at all-time highs with the rise of automation, artificial intelligence and digitization — and the outlook seems gloomy. For example, CBC News reports one to seven million Canadian jobs might be lost in coming years due to automation. As an example, one IEF leader at the table said the rise of new eCommerce technologies is making sales and customer support staff worry their skills will soon be obsolete.

The bright side: more jobs, only different

History, though, tells us disruption isn’t always so bad for jobs. It just makes new jobs, much more specialized, and technical, but new ones nonetheless. Consider the rise of jobs in banking despite the introduction of ABM’s, telephone and online banking. And today, studies are emerging that support this notion, with more digital innovation and Artificial Intelligence (AI) technology, there will simply be more human-robot collaboration, and many more specialized roles created.

Skilling up your current employees

With the creation of these new higher-skilled jobs, IEF members suggested action is to make your legacy workforce ready for the change, reducing the job loss as much as possible. At one construction company in Calgary, for example, electricians are being trained in computer networking to meet a growing need for wired, digitized technologies in large-scale building projects.

As building owners demand more technology, I have looked for ways to have our existing staff learn new skills, said the CIO.

In the oil and gas industry, another IT leader commented they are looking at ways to improve efficiency by giving field service “just in time” visualization and analytics.

Pro tip: Show your employees you care about their livelihood by proactively thinking about how digital will disrupt your workforce, then develop strategies to prepare your people for the skills they need to adapt.

2. Competing with the blind spots

We live in an era when an online retailer once known for selling books can purchase a billion dollar grocery empire and no one raises an eyebrow. In fact, as Amazon continues to expand its grasp on every aspect of our connected lives, its move to acquire Whole Foods seems like a natural extension of its services.

It’s also a stark reminder that competition in the digital age doesn’t always come from the traditional places you expect. So, if you limit your scope to worry only about the direct competition, you are leaving yourself vulnerable to blind spots, said the IEF members.

“In the pipeline industry, we are starting to look at Amazon and FedEx as competitors,” said one IT leader in Calgary. He explained the logistical expertise of those two seemingly un-related companies, means one day they could easily disrupt the extremely complex, wasteful operations of the global energy trade.

Open your eyes to blind spots

Spotting the “Amazon threat” or the “next Uber” for your industry is not always clear, but it must be done. “I constantly look beyond my industry to find out about new competitors,” said another IT leader in the energy industry.

One approach is simply to keep an open mind when watching emerging trends. One IEF member discussed how this approach changed his view on the rise of electric vehicles:

We actually view Tesla and electric cars as a positive for the gas industry, now. Our research suggests that electric cars will fundamentally rely on natural gas power generation. The rise of electric cars will change our industry but not kill it.

New models for a platform economy

Re-defining what it means to be competitive is another practical approach — you might even need to start working with, not against, the enemy. Things like “co-opetition” and partnerships are increasingly needed as digital platforms, open ecosystems and online marketplaces rise in popularity with consumers.

“Construction is known for being highly competitive – you win the bid, or your competitor does,” said one IT leader. “But today, I see more projects where we collaborate with other firms.” Similarly, one IT leader wondered why airports and airlines don’t collaborate to offer an end-toend customer experience.

Further Reading: Welcome to the API Economy via Gartner

3. Is it time to buy ransomware insurance?

Buying insurance is always a gamble, but when it comes time to protecting against modern cyber threats, such as ransomware, calculating the odds isn’t always so easy.

As one Reuters reporter notes, not only is cyber insurance expensive — ranging from $100,000 to $10 million in some cases — but many companies still do not consider themselves at risk of attack. This question about cyber insurance will likely become much more common. If the members of the IEF serve as a good indicator of things to come (as they so often do!), not only do high-profile attacks like the WannaCry virus force leaders to pay attention, but at every single IEF event this year, a majority of attendants admitted to being targeted by a ransomware attack. And most admitted to having paid up when the time came.

Do you insure or don’t you?

Obviously, we all want insurance when we need it. But there is a business case to be made that the costs of an attack are still far lower than the investment needed to insure against them, said IT leaders in Calgary.

“We have looked at buying insurance for ransomware and related incidents, but it seems like the insurance companies do not have a clear idea about it,” said one of the panelists.

IEF attendees explained they prefer to simply pay the ransom in those situations. But this might have negative consequences in the long run. If companies pay up so easily, it might accidentally encourage the attackers to raise their prices.

In any case, we recommend you take the threat seriously, and weigh your options if you haven’t already. As one IEF leader said, no matter how much effort you put into protection, human error is nearly impossible to overcome — and your chances of being hit by an attack, successfully, are high.

“To put it bluntly, you can’t prevent stupid mistakes,” he said.

See How the Internet of Things will be even more vulnerable to cyber attacks

Visit our Ultimate Security Hub

In several of our new building projects, we have installed complex building control systems. While these systems help with energy efficiency, we have the challenge of addressing brand new cyber security challenges.

4. Let’s kill “IT” — re-branding the business driver

Perception is reality. So what should IT leaders do to combat a nagging perception that they are still nothing more than order takers, break-fixers, and back-room maintenance workers?

The Calgary IEF contingent had lots of good advice to share on this topic.

Change the name, change the game

One idea is to actually change the name from IT to something more descriptive of the department’s higher, strategic value.

“We changed our unit’s name to ‘Business Technology’ a few years ago. That move has had a positive impact,” said one attendee. Inextricably linking technology to business outcomes, together in the title of the department, has helped outside stakeholders see the team in a new light, creating a more collaborative team spirit, he said.

Focus on what matters

Name change or not, IT must ensure it is focused on business outcomes if it is to realize its potential in the organization. “I am more focused on defining a business outcome for the group than specifying a detailed plan,” said another IT leader.

Similarly, another IEF member said it is time IT stopped wasting its energies trying to convince the business of using certain technologies, such as cloud or SaaS. Instead, they ought to change the topic to what the business aims to achieve. Only then should they start planning for what solutions and approaches are needed.

Kill the IT department

Another radical idea was brought to the table, which on second glance makes a lot of sense: kill the IT department as a stand-alone, centralized unit. Once done, you can disperse technical leaders throughout the business, embedding them alongside colleagues and customer-facing departments to better serve the needs of the business.

When I look at IT today and the opportunities today, I think we might be able to eliminate IT,” said the executive. “Why bother trying to bridge the gap between IT and the business? Put the technology people in the business.

CIO Table Talk: The Cheat Sheet

You can’t always plan for everything. But if you plan for nothing, you will be making a sure-fire mistake.

The signs of disruption are clear. Their impacts, while not always predictable, are unavoidable. For the leaders in Calgary, the actions you take today are obvious, and bound to make a significant difference.

  • Start training employees now to prepare them for a future of automated and AI workers.
  • Broaden your horizons to spot the competition in the least expected areas — and consider teaming up with old foes to survive.
  • Start the process of re-branding IT, so it will be empowered to deal with a volatile future.
  • Start calculating today how you will handle emerging cyber threats, such as ransomware.

Join the conversation: #CIOTableTalk

 

VMware, a global leader in cloud infrastructure and business mobility, helps customers accelerate their digital transformation. VMware enables enterprises to master a software-defined approach to business and IT with VMware Cross-Cloud Architecture™ and solutions for the data center, mobility, and security. With 2016 revenue of $7.09 billion, VMware is headquartered in Palo Alto, CA and has over 500,000 customers and 75,000 partners worldwide