The Manage + Transform Challenge
Technology is the new currency of business. And in today’s world, it’s important for your organization to keep operations running efficiently while helping the business fuel innovation. Listen as our experts discuss well-known companies that are already following this model and how to stay competitive in the field.
Note: Complete audio transcript found after author info.
The Manage + Transform Challenge
Published January 19, 2018
Jeremy Nelson: Welcome back to another episode of Technomics, where technology meets economics here at Insight. So, we’re getting ready to fire up another conversation. As many of our frequent listeners know, I am a huge gamer. The other day I was sitting at home, playing on my X-Box when that little light started to flash to let me know my batteries were running low. Thankfully I had my handy-dandy Amazon Echo Dot sitting there next to me and I was able to, with the sound of my voice, order new batteries, get confirmation on my phone in a matter of seconds, and to my joy, I stood up, walked to my room, pumped my fist in the air and proclaimed to my family, “We live in the future!” It is absolutely true. And that made me think of a conversation we’re having here around Insight more and more often. Around the necessity of manage and transform. We have a couple of guests with us today, Steve Dodenhoff, President of Insight US, and Mr. Mike Gaumond, Senior Vice President of Services here at Insight to help us walk through the ever-changing platform of manage and transform. Welcome gentlemen.
Steve Dodenhoff: Nice job Jeremy.
Mike Gaumond: Thanks buddy.
Jeremy Nelson: Its great to have you here. Now Steve, you in particular, I know that this is a conversation that is near and dear to your heart. In fact, I happen to sit, and listen to a presentation you recently did where you went through our manage and transform strategy and the necessity that it is around business. Why is this such a big conversation today?
Steve Dodenhoff: Its important because there’s a lot of change happening in the external marketplace, both from a technology point of view and really a customer and a workforce point of view. Technology is always changing. But I think its recently, with the amount of consumption and adoption around cloud, and companies emerging out of nowhere because they’re taking advantage of technology in a different way, there’s this big, intense energy around moving quicker, better, faster, being more agile. At the same time, mature businesses still have to optimize the core. And a lot of people are really starting to think, “You can’t do that with sort of a singular view of the world.” You have to separate activities and strategies from keeping the lights on. Some people talk about bi-modial, but the bottom line is you really have to optimize what you have today. Then secondarily, and even more critically, you have to transform or innovate. So, calling that distinction, manage and transform, you could call it different things. But the key is that recognition that those two things are now critical in today’s kind-of environment.
Jeremy Nelson: Its challenging as an organization with an established market presence to transform within demand to technology. I think the heart of this is technology is driving a lot of that transformation and the disruption that we’ve chatted about, we’ve covered on Technomics. I think its hard to turn your back on the existing business, while you try and focus on preparing and transforming the businesses today and tomorrow. So, to that, Mike obviously, as a leader within our services organization, now plays a significant part of that conversation. So really what do you think from your perspective, on the services side is driving some of this manage and transform discussion.
Mike Gaumond: I really try and look at it from a client perspective, and I think you hit the key note a moment ago when you said businesses can’t turn their back on the core. So, any business that’s in operation today has to face this dichotomy of “How do I keep the business operating and effective today to serve our customers. Yet at the same time, how do I ensure we’re relevant in three or four years given all the changes Steve just talked about in technology, and the workforce, and in their customers.” One of our clients really posed it well of how they’re wrestling with this dichotomy. She’s the CIO of a Fortune 500 company. She talked about the need that they had to get the basics right. Meaning they had to help the business keep the lights on and stay operational today, and that was a core part of their charter. If and only if they did that well would they earn a seat at the table with transformation for the business. Which is where they really wanted to play and where she really wanted to help their business transform to compete in the new realities that they face. But it wasn’t a choice. It wasn’t like she had the opportunity to say, “Well I’m going to let someone else worry about keeping the lights on and I’m going to go focus on the cool transformation stuff.” And its not a choice for the company. They have to keep operating for today, they have to prepare for the future.
Jeremy Nelson: The need for revenue doesn’t stop just because we’re preparing for tomorrow.
Mike Gaumond: Exactly.
Steve Dodenhoff: Well I think one of the other points Jeremy is just, there are net-new companies coming out all the time that are disintermediating mature businesses. People are in mature businesses seeing that marketplace change and threats emerging all the time and there’s just tons of examples. So, transformation has to be a part of their language from a defensive position number one. And also, to continue to maintain and grow their share in a business that they’ve earned the right to own and dominate. So, there is a threat in today’s world of emerging companies working on new models for how to go to market. My daughter works at Amazon. She actually works in the Amazon product group which is bringing this IOT to market. And so, Amazon’ view of the world is, can they essentially take out an entire layer of distribution which is one of the most mature distributions out there, retailers. And again, their view of buying into Whole Foods has a view there. So, if you’re not transforming, these type of things are coming down the pipe and threaten huge, huge industries and business models.
Jeremy Nelson: And that’s a great point. I love the startups because all you have to worry about is transform. That’s it. You don’t have anyone to make happy because you don’t have anybody. Your whole job is just to transform and to innovate. But you also, I love the mention of Amazon because talk about a fairly established organization now. If we go back into the .com days, Amazon really came into prevalence. That’s a fairly extended period of time and they’ve got and established business model and customer base. But yet they still somehow find a way to continue to innovate and transform. Out of nowhere, Amazon web services coming up. How on earth does that have to do with moving books, right?
Mike Gaumond: It’s a great example of a company that was B to C focused. Business to consumer focused and was disrupting people like Barnes and Nobles, and how consumers purchase books, and transform themselves into a B to B play really. That’s disrupting many core parts of our industry in terms of how companies from the B to B perspective acquire and consume technology.
Jeremy Nelson: Absolutely, and now they’re in the AI space. What else drives off of that technology and innovation? You know, its really easy when we talk about examples like Amazon. Where they have a lot of skills to be able to go out and do things all on their own. Many organizations don’t have that same type of leeway to be able to do that level of innovation. So, from your guy’s perspective, Mike we’ll start off with you, what are some of the products or services that you see from our customers that are looking to manage and transform that are helping them get there, without necessarily having to try and take all of that on internally.
Mike Gaumond: So, a lot of companies are wrestling with this today and trying to determine. One of the key areas they’re focusing on is how do they engage differently with their customers. So, our clients are looking at their customer base and saying, “We’re seeing an increase in digital engagement with our customers.” One key category, so they look at things like applications and analytics and mobile and web and social and say, “How do I change how I interact with my customers?” The other vector you see there is, “How do we actually change my products that we develop today to make them smarter?” So, we’re working with manufactures heating, ventilating, and air conditioning units. It’s a 100+ year old company that’s manufactured these for decades. And they’re now building the intelligence into these units and they’ve built sensors into them and every 15 minutes, every air conditioning unit on every building that they serve sends about 60 data points back to a gateway that pushes it back up into the cloud and they perform analytics on it. And what this has allowed them to do is actually transform the way they support those units for their customers. So, they’ve shifted from schedule-based maintenance to predictive-based maintenance. And this does two things for the company. First it saves them a tremendous amount of money on maintenance, because they’re keeping the equipment running at a much more optimal fashion. But second and more importantly, it improves their customers’ experiences because their customers aren’t experiencing downtime and failed units and emergency calls. So, it’s a great example of a hundred-year-old manufacturing company applying digital technology to their products to change the way they interact with their customers.
Jeremy Nelson: They’re almost like a transform and maintain. I mean they’re literally changing their product through transformation to help them maintain. Anyway, that’s a little play on words there. But I love that one because it comes back to that customer focus. It helps them internally as a business create more efficiently, but at the end of the day truly serve their customers in a much more user-friendly fashion. In a way that they would prefer to be interacted with. So, I think that’s great. Now obviously, there’s a business and a risk perspective to that. So, Steve, in your position as President of Insight, how do you embrace that change? How do you embrace that transformation or what kind of advice can you give to our listeners on how they might be able to balance some of those risks on pursuing these products and services?
Steve Dodenhoff: Well I think its really a big opportunity I think the risk is fairly low. If you don’t do it, you can be business as usual and you just have to hope somebody doesn’t come up with a better mouse trap. So, what I really try to help, at least our mid-market clients understand and reinforce, is that never before have enterprise grade technologies been available to a five-person company, or a 20-person company. Jeremy, you talked about how Amazon can do it on their own. Well they can, they have the money to do that. But the technologies that they’re using are now all available in a different consumption basis, it’s in the cloud. So, if you need massive, massive compute or massive data storage, you used to have to spend tens of millions of dollars to get to it. And whether you used it all or not, or you needed more for two days a year, all of these are problems that are totally solvable and allow companies to take risks in terms of investments and align those investment risks against what they think could be future revenue streams. And that’s why all this transformation and innovation is happening which is threatening traditional companies being very agile, leveraging all kinds of technology that helps really optimize an entire business with development teams that can work globally and connect. I mean these are the things that people who don’t have a bias towards the old way to innovate are doing. So, to existing clients and to people who have a more mature business, they have to be pushing their teams and potentially setting up unique teams who’s sole purpose is to innovate inside a traditional world. Because if they’re not testing and learning, if they’re not practicing that, if they’re not starting to build that DNA, it’ll be very difficult to move fast enough if they ever do get threatened. So that’s why we see lots of people working on these things. And people like Insight are playing a big role in helping to facilitate that if they don’t have the skills, get in there quickly, proof of concept, pilot, teach their people how to do it. That’s an important role that we play, and it starts people getting in the habit of this risk and reward. I think most of the mature clients have an advantage over the folks that are from square one which is: they have a client base, they have a workforce, if they’re engaged they know the problems they need to solve, they just have to attack them in a different way.
Jeremy Nelson: And that’s a great one. If they know the problem they have to solve. I think that’s the next big question, right? How do they know. How do you identify which part of your business is ripe for transformation? Because again, if you’re stuck in that model, looking at the same business for 15-20 years, how do you know what needs that next round of transformations.
Steve Dodenhoff: In my role, the numbers don’t lie. The numbers don’t tell you the answer, the numbers tell you where to start looking. So, if you’re a client whose revenue is down, its declining somehow, you’re having a problem serving your clients, you’re challenged somehow in profitability, there’s efficiencies and cost-savings. It doesn’t have to be killer app type, “I built the next big great revenue stream.” Its using technology to drive efficiencies in the business, keep and maintain workforces that if attrition, if you’re struggling with that. Maybe it’s the technology you’re providing them, the way in which you’re interacting with you, with your clients. So you kind of have to take a data driven view to come up with some hypothesis around the problems that you’re trying to solve. But I think in the end innovative teams can work quickly to test and learn, leveraging technology that doesn’t have to be acquired, implemented, managed, refreshed. There’s all kinds of models out there for quick test and learn. That’s where I think you would want to have three or four different things going on to test your hypothesis. Those are all things that can scale really rapidly so the great news is if you get onto something, you can scale it very rapidly.
Mike Gaumond: One thing I’d add on, I agree with everything Steve said, is test it with your clients. Because your customers I promise you are customers of Amazon and Uber and Google and Airbnb. And what that has done, its created an expectation in terms of the way I should be able to use technology to get things done. And they may be using that in their personal life and they walk into the office and they say, “Why am I still dealing with this vender, partner, supplier of mine the same way I did 15 years ago. Why can’t I deal with them the same way I deal with Amazon or Airbnb or whoever it is. So, its setting a different expectation level, that’s what’s driving this notion of the consumerization of IT. So, go talk to your customers and ask them not only what their expectations are but what are they seeing. You’re probably going to get early glimpses into some of those non-traditional competitors that Steve talked about that are already knocking on the door of your customers that are saying, “I’ve already built a better model of that mouse trap, and its 100 times faster and one tenth as expensive as what you’re dealing with today. Why don’t you give me a shot?” And what does the customer have to lose?
Steve Dodenhoff: I was meeting with a company that does kiosks and industrial design. So, a pretty compelling, visually appealing and they had very much of a client centric view and sort of an application centric view. And so, there’s this huge human factors component to what’s going on as well that you just don’t want to underestimate. And the reason the kiosk was actually a fairly good example of what happens when the seesaw tilts and goes the other direction. Because the airlines about three or four years ago started to implement kiosks within the airport, so think of all the airports in all the world and how many people go do that. Kiosks were never a part of that experience. You waited in line, you went up to the agent, but all of a sudden, kiosks started coming in. And everybody got exposure to it and it was the only way it could get done. And so, kiosks are fine, kiosks the first year were like, “This is crummy, I don’t like it.” But then, people started getting used to it. So, what you’re seeing is the human factors element of it now is acceptance towards it. So, people are now opening fast food restaurants and other areas are starting to invest in technology because the human factor element is already done. Which is to say, “I don’t have to fight uphill because people have broad exposure to it.” And this is why we have to connect the dot between mobile applications. Not like you have to have mobile applications. But remember, everybody and anybody has 50 of them on their phone today. And they’re doing a lot of different things with those. So, if you’re a company that doesn’t have one or its not very user friendly, or its not satisfying those needs, you are competing with the everyday experience of one of your customers who has 50 other experiences that are more favorable. And the likelihood that they’ll go find an experience that’s more in line with what they’re common day looks like because a competitor has one is very real. And so, this transformation, this innovation is actually, you are being tested everyday as a company against a B to C experience that a lot of people are seeing. So, this big wave is off and to the races. Its not going to stop, its definitely something that you have to lose a little bit of sleep over.
Jeremy Nelson: That’s a great analogy; you’re talking about the kiosks. I had a profound little moment myself. Like I pulled up to the bank the other day and I looked inside and there are no more teller stations. There is not a single slot for a teller. There are fancier, they don’t even call them ATMs anymore, but they’re called digital tellers. So, they don’t have the same limitations as an ATM, but the human factor is gone. Absolutely gone.
Mike Gaumond: I’m old and I remember actually when ATMs where first rolling out. And the traditional banking industry had this huge debate because all the traditional retail bankers said, “Customers don’t want to interact with a machine, they want to interact with another human, with a teller, with a clerk at the bank.” Turns out they couldn’t have been more wrong. When was the last time you went into a bank and stood in line in the lobby at a bank? Now it’s like Steve said, think about the kiosks that companies are deploying. And what this is morphing to is very much a self-service world. Where the customer actually preferences, “I don’t want to deal with another human. Not because I don’t like other humans, but because I can do this more efficiently if you just give me the capabilities to do it on my own. If you do it in an intelligent way and make it easy and simple and pain free, I’ll do that all-day long. And by the way, you as a provider to me, as a company I do business with, are going to save money because you’re going to be able to act more efficiently as well.”
Steve Dodenhoff: One other thing, because I was meeting with a client in New York who’s really doing some innovative stuff in their customer base, and they introduced this concept that the next shift in their view of the world was: we have now taught people that they can really effectively go somewhere and get what they need. Like hey, go to the web, get whatever you want; go out and get information. And their view is that actually the next really important frontier is that companies have to live where the person is. So the model of your customer goes to get what they need, that you have to live in their world. Which is the applications that they access, the physical locations where they’re at, the device that they’re using, and you have to push at the right time based on what’s happening in their world the data that’s most relevant to them about whatever it is that’s important to you. Because people won’t over an extended period of time, its too fragmented. There’s got to be a people-centric world that we all have to feed. And I thought that was pretty compelling thinking that is probably pretty accurate.
Jeremy Nelson: Yeah, even the Amazon example that I had knew what I wanted, I said order batteries. From my order history and what it knows about me, it knew exactly what I wanted, where they wanted to go. I mean that transaction took probably less than 20 seconds. And it was as secondary to me. It really wasn’t even a transaction. It was just something that happened in the moment.
Mike Gaumond: And how many humans were involved besides you?Jeremy Nelson: Me. And I was barely even involved. I was very marginally involved in that participation. Alright so, we’re going to take a quick break. We’re having some great discussion here with Mike and Steve and stay with us and we’ll be back with more Technomics.
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Jeremy Nelson: And we are back with Technomics, thanks for sticking with us. Again, we are here with Steve Dodenhoff, President of Insight U.S., and Mike Gaumond, Senior Vice President of Services for Insight. And we are talking about manage and transform. So, gentlemen, we’ve already been talking about why its necessary. Some of the things on how we identify where we go after transform. But here’s the reality, IT isn’t getting buckets of money to out and transform themselves. In fact, very often, they’re being asked to accomplish more on top of the existing management piece we’ve already talked about, with less. So Mike, I know for a fact that you get this question a lot from the services side. So how do organizations continue to transform with the same or potentially even less investment from the business side?
Mike Gaumond: Now you’re absolutely right. Almost every client that I talk to is being asked to do more with less. And part of the more is you have to transform as well. You can’t just keep doing what you’re doing today. And it seems like a dichotomy, “Well I need more money if I’m going to do the transformational stuff.” But we’re joking at the break, our CFO is not coming to us saying here’s 10 million, go figure out some cool transformation stuff to do. We have to figure it out out of what we’re doing today. But there are some ways you can do that. One, if you’re smart about how you acquire technology, hardware and software, and smart about what you decide to purchase and own and have as your own assets and you leverage in the cloud, you can actually save a tremendous amount of money depending on how much you’re spending today. Second, if you’re equally smart about which activities you decide to do yourself that are core and important to you, versus what you outsource and what you leverage a partner to do; in that case, you can frequently get a better service level at lower price point. So both of those actually free up some dollars from a budget standpoint. And then you can reinvest that money into the transformational areas. But its about making those kinds of tradeoffs.
Jeremy Nelson: It’s a little bit like bringing the startup into the established organization.
Mike Gaumond: It is. They don’t have infinite funding, they have to decide what they’re going to focus on. They have to make some bets and they have to decide, “What am I going to do myself as a business versus what am I going to leverage a partner help me do.
Jeremy Nelson: Absolutely, and then it becomes a prioritization exercise. And so Steve is obviously president of Insight, I know you have some experience on setting priorities. How do organizations go about, what are some of those top priorities that you see as organizations try and identify and look for ways to do that innovation with those existing budgets.
Steve Dodenhoff: If I were to put my CIO hat on, I’d answer it from that perspective. I think to Mike’s point, you do have to focus on the basics first. So I always think about, you have to check some boxes before you try to do the hard stuff. And checking the box around, do I think I’ve really optimized my spend, have I consolidated in a way that I’m getting all the buying power, have I really negotiated as best as I possibly can, and that’s a check box. And we see a lot of big clients who still have fragmented spend and maybe that’s an opportunity for them and that’s number one. Number two, I think you definitely have to make sure the current environment you’re supporting, again from a CIO hat, you’re not getting spun up every two weeks with issues and problems. And so you want to make sure really that the foundation that you’re managing is solid bullet proof operationally, lean and efficient. And if you haven’t got that going, then you might as well spend some dollars to get that really humming along. Because those are two foundational things that set the stage for whatever else you might want to do. And this is really where the innovation comes in. And I think the first thing you have to do there is do an organizational assessment within the org that you have and test the skill set DNA. Is it even possible with what we have people, strategy, etcetera, ideas, innovation, could we even leverage these resources to do things differently? I think that’s a really important thing for all of our clients to do; get real with the skill sets and capability. And then they have to have passionate business leaders who understand bigger problems that they’re trying to solve. So that’s the partnership between, “I think we have some interesting ideas, and then we actually have the capabilities and skill sets to execute them.” If you don’t have the skill sets its okay, if you have the good ideas. And then the CIOs role is to admit it, not in a negative way. But to make sure that they start and support the activity around innovation. Because a lot of companies will want to bring that on board over time. The people that they manage will want new opportunities, and so that’s a big lever for the CIO to help the organization understand that they’re going in this direction and that doesn’t mean you’re bad. But we’re going to need some help and we can start pivoting you into that. And once you start going down that tack, it really is all about focusing on things that have big dollars associated with them. Hypothesis that are meaningful to the business, custom requisition, major savings, or things that are clear so that small spend can get justified in terms of an ROI that might be a seven, eight figure kind of a spend. Because sea-level people, if they see an innovative idea piloted that shows a return, there’s always money available in companies, its just currently being spent somewhere else and the justification for it isn’t clear. So, focus in on the things that have short windows. Can you show success in three months, in six months and those are the ones at a CEO level, “Hey if we did this and spent three million, its going to be worth 100 million dollars to us. Those are easy, those do not get passed over. But a lot of people end up taking 18 months and you know what happens then? The markets move, some things change, new technologies come out, the customer predisposition for that thing is gone. So it has to be very short so you don’t miss the market in kind of this very dynamic market.
Jeremy Nelson: I think that’s great, we kind of tied a couple of different things together here, a couple different concepts. From a business perspective, like you just said Steve, about being willing to kind of look at those short term spends into longer term investments and revenue and growth. And Mike earlier you were talking about as we look to engage our customers, look to innovate quickly, fail, and then innovate again. It’s a uniform theme across both of those that I think comes back to this manage and transform.
Mike Gaumond: I think you’ll find your customers are willing to help you with it. One of the things we’re trying to do some innovative things right now and we’re introducing chat bots as a self-service engine into our workplace services. And we’re piloting it internally. And that was one of our big workplace services just a month or so ago. And I was talking to the CIO and I was talking about what we’re doing, and I just asked him point blank. I just asked, “Would you be willing, once we’ve proven it out internally, and launching a pilot at your company and trying it?” And he said, “Absolutely.” So, your customers will help you test this stuff out. So, to Steve’s point, rather than spend 18 months behind the scenes trying to make sure its perfect, go to your customer and say, “Hey this isn’t perfect, we don’t have it fully banked yet, but we want to do this with you and we think you’re going to get some benefit and learning along the way.” Most of the time your customers will jump right in with you.
Jeremy Nelson: Well then, I think you bring up a great point, because a lot of conversation we’ve had today, I’ve heard partnership. And I think that’s really at the heart of it. Finding somebody that you can truly partner with to help drive that success and that innovation. Well great, well gentlemen, thank you so much for joining us today on Technomics. Its been a fantastic episode, I’ve loved the conversation that we’ve had about manage and transform. Looking forward, we know you’re both good friends of the show, frequent guests. And we look forward to the next time you’ll be with us.
Steve Dodenhoff: Thanks, enjoyed it Jeremy.
Mike Gaumond: Thanks Jeremy.
Jeremy Nelson: Thank you.