The CIO and the network era

By Dr. Marianne Broadbent

Soon, more devices than people will be connected. This signals a ‘tipping point’, beyond which lies the Network Era, where the falling cost of computing power and network bandwidth will make it possible to connect almost anything, from refrigerators to elevators.

When everything has the potential to become a node in a network, most industries will be affected by seismic change. The music industry has already felt the impact of the Network Era through phenomena such as Napster, which gave music buffs a way to digitally share music via the Internet. Since then overall sales of compact discs have fallen around ten per cent a year.

A few months ago, a global group of members of Gartner’s CIO Executive Program met in San Francisco to pinpoint the opportunities for their enterprises. This might sound like strange timing, considering the state of some country economies and lower levels of IT spending. But despite the gloom and doom at the time, we know there is always a percentage of companies who have their eye to the future – the ones who will be ahead of the pack in 2004 and beyond.

We were joined by Professor N. Venkatraman from Boston University, who has been working on the business potential of the combined impact of computing, networks and bandwidth. We spent two days working in interactive groups to assess how the enterprises represented might take advantage of the Network Era, before it takes advantage of them. Then we followed up with a series of more detailed case studies.

The conclusion was that in the Network Era competitive advantage will give way to collective advantage. And CIOs have an important role to play in preparing their business counterparts for both the opportunities and the threats.

Three CIO imperatives

CIO involvement with the business can be summarized into three of our CIO imperatives: anticipate, strategize and organize.

1. Anticipate: Understand the opportunities from the combined impact of three laws.

Network Era opportunities will be generated by the compounded effect of three laws: Moore’s (growing power of computer chips), Metcalfe’s (growing value of a network ), and Gilder’s (growing communications bandwidth).

On its own, the effect of each law is dramatic. Taken together, their effect is compounded. Most products are information rich, but that information has not been exploited. In the Network Era, it will be, and this is what’s going to transform industries.

2. Strategize: Have an enterprise process able to harness ideas, sense and respond, then transfer.

You need a disciplined process to bring such Network-Era opportunities to realization. You can usually recognize three states we refer to as generate, develop and transfer.

In the generate stage, Network-Era creativity should include people from the upstream supply chain, to downstream intermediaries and end customers.

The develop stage, which reduces a large number of ideas to just one or two, is about exploration and experimentation. Call it sense-and-respond. The sense part of the step is an experiment that leads to a small-scale trial or demonstration. Then there’s a pause for evaluation, followed by a correction before the cycle begins again.

The transfer stage takes the winning idea from develop (where it is validated by demonstration) through to sign-off and commercial rollout.

3. Organize: CIOs need to influence, coax and coach champions, and deal with fluid enterprise boundaries.

If CIOs don’t know or can’t identify technology-enabled business opportunities, who can or will? CIOs must play a leadership role to avoid missed opportunities. Yes, easy to say, harder to do. It’s about identifying your role here.

Leading CIOs are working on five key areas so their enterprises are not blindsided by industry changes that could and should have been anticipated:

• Coaxing and coaching fellow executives about Network-Era implications;

• Championing technology-based innovation jointly with a business colleague;

• Influencing strategy to encompass external partners;

• Acting on the basis of future fluid enterprise boundaries;

• Helping their colleagues to nurture external relationships.

Executives and managers are going to have to devote more of their time to managing relationships. Most CIOs are experienced in key-relationship management, so they are well placed to share their knowledge with their business colleagues.

Don’t let your industry be transformed while your back is turned. During volatile and tough times it is more important than ever to provide leadership to avoid the ‘missed opportunity’ trap.

Dr. Marianne Broadbent is Group Vice President and Global Head of Research for Gartner’s Executive Programs.