Re-Engineering IT for Digital Transformation

For many companies today, business transformation means digital transformation. Using information technology to automate and speed up processes, design innovative practices, and create new revenue streams, requires a New IT organization.

Crucial to the success of digital transformation is a dynamic IT team with a dual mission of supporting the IT infrastructure and creating new digital products, disciplined and practical but willing to experiment with new ideas and tools, and a reputation for being both an excellent student and a great teacher—continuously learning but also guiding others about what technology can do for them.

“We are just at the cusp of a significant business transformation at BDP,” Angela Yochem told me recently. Yochem is the Global CIO of BDP International, a logistics company specializing in shipping sensitive materials that require special handling or are subject to regulatory requirements. “We move things around the world but we don’t actually own the planes, the ships, the trucks or the warehouses. We are like a travel agent for our customers,” says Yochem.

BDP is a virtual company, operating in 130 countries without owning logistics and transportation assets. Now, however, it is transforming into a digital business, increasingly relying on information technology to both support and drive its services.

A pioneer in the transmission of data electronically, BDP has always regarded IT as an important component of its business. But today the business is changing, “moving from what has historically been very manual sort of service offerings to more automated services,” says Yochem. “Our customers’ expectations continue to change across the board and with them, the demand for greater visibility and automation tools. BDP needed to change the focus of its IT shop and that’s why I was brought on board in early 2013,” she adds.

Here are the 6 key actions Yochem took to transform IT so it can play a major role in BDP’s digital transformation.

Run IT like a software shop

A new focus on developing software that will make BDP stand out in its industry has led to the re-definition of IT’s mission. “We moved away from running IT as a traditional order-taking organization to a digital products group. That shift has spanned people, processes, and the technology itself,” says Yochem.

The not-invented-here syndrome has no place in a dynamic and creative IT organization.  At BDP, this has meant adopting new software development processes and hiring software developers from startups and from large software engineering organizations, as well as working with them as business partners.

Become an early adopter of new technologies

IT used to be a conservative place, avoiding anything that has not first worked elsewhere. Not anymore. Yochem: “BDP, like a lot of other large companies, has always been a fast follower, adopting technologies only after they were well proven in the industry. Today, we are an early adopter of new technologies.”

Yochem has opened up her “software shop” to new sources of ideas, tools and technologies, from startups to universities to anyone who may supply “capabilities that are not yet commercially available.” There is an evaluation process in place, allowing her team to “quickly absorb, test, and utilize emerging technologies, and discard them if they are not appropriate and don’t give us a leg up on our competition.”

Work with colleagues and customers as a true business leader

As technology is increasingly an integral part of the services BDP offers, IT is engaged with all the right constituencies throughout the product lifecycle. “You see us out on sales calls, you see us talking to an existing customer, you see us very much plugged in with BDP’s operational leaders,” says Yochem. “We are engaging as true business leaders who just happened to have extreme technical depth.”

Yochem sits on BDP’s management committee and observes that “we all recognize the changing landscape of our customers’ businesses and the new opportunities we have to help them. Technology is a large and critical part of this evolution.” She adds: “I’m not trying to lead from behind in this role.”

Be fast, be flexible

Like other leading-edge IT organizations, BDP’s has adopted the Scrum project management and product development methodology and shifted to a DevOps environment, eliminating previous bottlenecks. Yochem: “Our business community has embraced Scrum as a way to allow for projects to take off before they have all of their requirements defined. If there is a delay in a project, it’s almost never development-based, it’s because the requirement still has to be flashed out. The pace of development is no longer a barrier for us to do anything.”

Bring in new skills and talent to create a continuous learning environment

Over the last three years, the IT organization at BDP has considerably expanded the range of skills it looks for in hiring. One set of new skills it has brought in relates to open software. “We have on staff many open source contributors,” says Yochem. “Because of that level of familiarity, we have great confidence in mainstream open source capabilities.”

Another set of new skills is that of data scientists. Their predictive analytics expertise is helping IT to move from reporting on past activities and present transactions to assisting with decisions about future actions. The dashboard BDP provides to its customers now includes scenario planning capabilities.

The talent mix and the varied responsibilities of the IT organization facilitate the creation of a continuous learning environment. The new dual role of the IT organization, maintaining the IT infrastructure and creating new digital products, creates an opportunity for what Yochem calls “cross-pollination.”

She says: “I don’t want to take a group of people and tell them ‘you’re keeping the lights on’ and say to another group of people ‘you are all about game changing work.’  My job is to see that the entire staff is energized and excited and able to see a career path and every week they take something valuable from their work.

We have been able to do some rotating between the teams that are doing the digital products work and the teams that are maintaining the legacy systems. That helps those who may not have exposure to more contemporary technology and it helps the people who were brought in to do the game changing work understand more about the context in which they are operating. Even the new capabilities that we’ve built have to work with our legacy systems that are core to our business.”

Engage with the broader community

It should be clear from the above that a large dimension of IT transformation is pivoting it from an internally-focused, secluded organization to an externally visible, engaged business partner. But going beyond colleagues, customers and partners, Yochem sees IT as an active player in society at large.

“We have a responsibility to engage with the broader community in a way that is constructive,” says Yochem. “We may be in a position to help the body of knowledge as technology evolves. If we don’t help, who will? Also, that’s how we grow as individuals and ensure that our perspective is constantly expanding in a way that’s beneficial to the companies, customers and communities that we serve.”

For CIOs, this means among other things, seeking opportunities to serve on non-profit or community organizations’ boards. Acting on what she sees as her broader responsibility, Yochem is serving on the board of the Federal Home Loan Bank of Pittsburgh, which provides low-cost funding for affordable housing and community development to member financial institutions in Delaware, Pennsylvania and West Virginia. “For me, I feel as if not only am I serving on a corporate board, but also serving a worthy, deserving organization,” Yochem told Forbes’ Peter High last year.

This is certainly not your father’s IT organization. Fast, flexible and creative, practicing disciplined risk-taking and opening up to external influences, cultivating new skills and engaging with the world, New IT is both supporting and driving the digital transformation of the business. Many organizations today are just starting their digital journey or have already taken significant steps toward infusing information technology, automation, and data analytics into their processes and offerings.

Yochem believes that most businesses that provide services to either consumers or other businesses “will be largely digital in the future.”  The challenge for these businesses is to accurately gauge the demand for digital experiences by their constituencies, both customers and employees. “Just because you can do something doesn’t mean you should,” says Yochem.

Another challenge is to understand the potential impact of digital transformation on the business. “Businesses that approach digital transformation only in a sense that it would provide tremendous productivity gains are probably not going to be the game changers in their industry,” says Yochem.

Instead, better focus on the new business opportunities: “The companies that are looking at digital transformation as a way to better serve and overserve and perhaps serve in any number of adjacent ways their customer base or even shifting into a new customer base with adjacent product offering, are the companies that will find themselves at the leading edge of digital transformation. I believe that’s were the focus should be and the productivity gains will follow.”

Yochem believes that the CIO is “perfectly positioned” to lead the digital transformation. Companies should not isolate their digital initiatives and put them in “one bucket,” she advises. As business leaders become more digital-savvy, “every line of business and every functional area will use transformational technology.”

In this new era where the lines separating business and technology leaders increasingly blur, Yochem believes the CIO will have a role similar to that of the CFO.  “Just like the CEO will not make many moves without the approval of the CFO, the same is going to be true for the CIO. But that doesn’t mean you will not allow the business lines to pursue technology similar to the way they look after their own finances today,” says Yochem.

The increasingly significant and visible role the CIO and other tech leaders play in digital transformation leads directly to Yochem’s prediction for the coming year:

“In 2016, we’ll see more board room response to the increasing importance of technology to their business strategies, products, and customer interactions. This is due as much to the operational risk element of cyber security as it is to the realization that the people creating technology for the company have a disproportional influence and impact on the company’s future. Boards will seek to add business-fluent tech talent—directors who can speak to the possibility of tech as well as cultivate tech acumen of board members.”

All businesses are now digital businesses and technology is a key topic of discussion and action for corporate boards everywhere.

Originally published on Forbes.com