In this blog we reveal key takeaways from our 2016 CIO Summit and the intriguing commonalities between NFL offensive linemen and enterprise CIOs today. You can also check out videos from the CIO Summit here.
Earlier this month, Sapphire Ventures and SAP co-hosted a gathering of more than 100 Global 2000 chief information officers (CIOs), startup executives and venture capitalists at our second annual CIO Summit in Silicon Valley.
CIOs came from as far as Dubai and London representing a range of industries, from IT services (HP, Box and Docusign) and energy (Chevron) to manufacturing (e.g., Koch Industries), retail (e.g., Burberry and Walgreens) and aviation (e.g., Etihad). The goal of the 1.5-day program was to explore critical trends in enterprise IT alongside startup leaders in AI, analytics, security, healthtech, and more.
At Sapphire, CIOs are among our most important partners — for the perspective they bring on technology and the partnership opportunities they offer high-growth tech startups. We talk to CIOs every day, just like we talk to the founders and executives at our portfolio companies.
But CIOs and startup founders don’t often get an opportunity to look into each other’s worlds. Startups may move fast and break things to innovate, but CIOs play an equally important role as the decision-makers and adopters of new technologies, in addition to being the keepers of backbone and structure.
The Summit was an opportunity to bring these worlds together and provide a window into urgent developments in the Valley. And it is precisely what we mean by our mantra “to the power of enterprise” — the idea that by putting CIOs of companies with a combined $1.5 trillion market cap in the same room as leaders from the most relevant tech companies today we can help exponentially fuel innovation and shape the future of enterprise IT.
This year’s theme was the radical reinventions of the customer journey in today’s technology landscape. Here are our key takeaways from the CIO Summit.
1. Extreme personalization and better analytics are creating stronger customer relationships
When we think of customer experience trends with respect to big data, machine learning and analytics, we often start by thinking of them as vehicles for customer acquisition. But there’s much more at stake.
“To build a special company you need to be great in lots of different dimensions,” said Sean Flynn, managing partner at Shasta Ventures. “The root thing is the customer and how they experience your technology, how they learn about it and how they interact with it.”
Customization and analytics are significantly improving customer experience, convenience and product use and fit.
Ron Pollard, CIO of Specialized Bicycles, provided an example: “We’re dealing with 200 different POS systems we don’t own,” he said. “Connecting what’s going on in the world with our POS data and applying these to the retailer is huge.” Although Specialized Bicycles is a manufacturer of high-end bicycling equipment, its customer-focused production and distribution strategy directly parallels the trend in enterprise tech.
Some of your customers will want an all-in-one solution. Others want the ability to customize their stack and interchangeably switch out parts. They all want the ability to easily integrate these solutions, whether it’s a custom bicycle or a managed data-center. The end-user experience is a constantly-shifting target, which means that an obsessive focus on the customer experience is the only way to service their needs.
Delivering a tailored experience to the customer no longer just means delivering a product that they’ll love. It means using data and analytics to understand the supply chain to the post-purchase experience to deliver customers the services they want, when they want them.
2. The key AI and machine learning challenges may not be what you think
Everything you may think you know about AI and machine learning could be wrong.
“AI has been mispredicted by both experts and non-experts in the past 20 years,” said Eden Shochat, a General Partner at Aleph VC. “All the predictions have been wrong — and every time.”
While tech heavyweights like Google and Facebook are hiring machine learning PhDs in record numbers, most of the time the challenge isn’t pushing the envelope on rocket science calculations. The relevant challenges are related to costs, resources and communication, which companies featured at the Summit, like Clarify, Fetch Robotics and Narrative Science, are working to solve.
Kris Hammond, Chief Scientist at Narrative Science advises companies looking into AI not to wonder, “What do I do with it?” Instead they should approach AI and machine learning from the perspective, “What could it really support?”
These advances can now be accessed through APIs, while the infrastructure is largely open-sourced. Retail companies like Walgreens or Burberry already have massive data sets totaling in the tens of millions of transactions over the course of decades. High-tech companies like Intel and SAP have a similar volume of workflow data from sales, marketing, and analytics.
For these organizations, the power of AI and machine learning isn’t to reinvent the wheel. It’s helping your customer select the perfect tone of makeup, or saving your VP of sales hours of fiddling on Excel. AI and machine learning will allow data-driven organizations to automate and optimize existing processes.
3. LOB users today demand better and more intuitive consumer-grade usability
Everyone knows that simplicity and ease-of-use aren’t just limited to consumer technology. The consumerization of the enterprise has meant that business users demand consumer-grade usability. But what’s notable is that these demands have accelerated and evolved toward more customization.
Given the increasingly blurred lines between consumer and enterprise tech, Siva Sabaretnam, head of research and design for enterprise products at Facebook, communicated the challenge well. As she pointed out, the focus is on “finding a meaningful way to connect to our end customers, and it doesn’t matter whether they’re on the enterprise side or the consumer side.”
She’s right. Siva and her panelists emphasized the importance of security, compliance and reliability as well as offering the most intuitive experience possible, which are also increasingly important factors. This is a crucial point for enterprise service providers in particular, who today must look beyond meeting the needs of individual sets of end users.
The rapidly shifting workforce is populated by digital natives who grew up using Google, Amazon and Apple products. Seamless, easy-to-use service doesn’t just mean enabling the output of the user. You have to enable how they work, which is in constant flux.
Looking to the future, Paul Chapman, CIO at Box, astutely noted: “It is about an internet of APIs and an internet of bots now, and it is about a platform economy and how do you, as a piece of the jigsaw puzzle, fit into that architecture that gives more freedom, agility and even the ability to switch out services as well.”
The challenge for the enterprise is how to deliver superior service that their customers now expect, without having to completely re-architect their infrastructure.
4. The CIO needs to invest in new technology like a venture capitalist
The complex technological ecosystem makes the CIO’s role increasingly difficult, as they maintain a complex mix of on-premise and cloud infrastructure. Once, CIOs were responsible for maintaining infrastructure and keeping the lights on.
Today, that role has expanded and the CIO looks more similar to the venture capitalist. Both need to mine an endless web of possibilities in order to choose a winning portfolio of technology companies.
As music executive Steve Stoute put it, “The CIO has to be the best offensive linemen in the league. They have to block for their companies and see what’s coming.” Those who fail to recognize future opportunities, while also protecting their existing IT assets, will quite simply get left behind. But those who successfully adopt and scale new technologies can create inflection points for their businesses.
Solutions providers who want to sell to CIOs need to weigh two caveats:
The first, articulated by Paul Chapman, CIO of Box: “How can we enable experiences by having a platform that fits in to whatever experiences companies are curating?”
The second, articulated by Fumbi Chima, CIO of Burberry: “How can I be sure that this solutions provider will still be around in two years?”
It’s important to understand that CIOs don’t have the same priorities as startups. They can’t build their technology stacks purely on top of the cloud, and adopting a new solution becomes infinitely more daunting when you’re worried it will collapse your internal architecture.
Ultimately, the CIO must be a business leader who is able to articulate their vision in business language to the board, and translate that into key infrastructure needs. Being able to predict what the customer wants and choose a winning solution plays a key role in the CIO’s success.
More to come
In the following month, we’ll dive deeper into highlights from the event.
This blog entry contains statements that are Sapphire Ventures’ opinions, including forward-looking statements. The participants’ statements or views do not necessarily represent those of Sapphire.