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Recently,  I had the pleasure of sitting down with Fernando Leite, a Global CIO for the past 12 years in both the manufacturing and telecom sectors;  we Future Biz QA.jpgdiscussed his perspective on the role disruptive technology is (and in some cases is not) playing in reshaping and reinventing the business world we used to know.   You can read more about Fernando’s BIO at the bottom of this interview.

Q Patrick: I have often heard you discuss the need for today’s executives to embrace a shift in mentality to break free of the trap of ‘past thinking’.  Could you elaborate on what you mean by this?

A Fernando: We need to move away from the 2000 mentality that thinks of I.T. as only a cost center and embrace a 2020 mentality that sees I.T. as a strategic enabler for changing the business model and driving competitive differentiation.  Look at how much the world has changed since the 90s: smart phones, social media, Big Data, real-time OLTP, the Internet of Things and so on, but how many I.T. departments still plan and execute the same way they did in the year 2000?   The 2000 mentality is where you structure your roadmap and organization based on what you are used to and what you know to be available to you.  In other words you ignore considering the ‘art of the possible’  because you can’t think past your knowledge of existing technological limitations that actually may no longer exist.  Today’s business leaders need to break free of these past paradigms and embrace disruptive technology to solve the big problems no one has thought were solvable. 

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“You can’t build modern business processes if you limit your considerations to the way you’ve always done things and old technology paradigms.”
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Q Patrick: This sounds like your definition of 2000 mentality is the lack of thinking out of the box?

A Fernando: Well, not quite.  It’s a lot more than that.   Metaphorically, imagine if you were going to design a new mobile phone today – but all you know, and are willing to consider using, are pre-smart phone technologies, so you wouldn’t have email, facetime, social networks, etc.  In other words, you wouldn’t have any access to real time information.   And now imagine that you must take this ‘new-old-thing’ you created and compete in a world of smart phones.  You couldn’t do it, right?  So why are we doing that with our I.T. enabled business processes?  That is what I am talking about with the 2000 mentality verses the 2020 mentality.   You can’t build modern business processes if you limit your considerations to the way you’ve always done things and old technology paradigms.  There has been a huge shift in technology enablers in recent years.  If you are not embracing them to drive a real time business and your competitors are, well, its game over isn’t it?

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Q Patrick: What should CIOs and businesses do to take advantage of recent technology evolutions?

A Fernando: There is no doubt we have reached an inflection point. We are now living in a world where everything relates to technology.   Let’s first think about it from our personal lives; today you interact with technology to do all the simple daily activities:

  • you ask for opinions Phone cartoon2.jpg
  • you want to know what are the new trends and social ideas about products and companies with whom you interact
  • you want real time response to your needs and issues, etc.

So  why aren’t we doing this in our business lives?

Conclusion, organizations need to use real time tools to map, understand, interact and answer what their customers want.

Let me give you a specific business example. You go to a month end meeting to discuss sales, revenue and financials. There is nothing more 2000 mentality than an excel file displayed on a powerpoint slide, right? It’s static, aggregated, non-interactive, took a long time to create and may not even be the truth.  Instead,  you want to see real time data and it all needs to be “double clickable”.  That is, you want to be able to drill down to the sales numbers and explain: 

    • how many orders you received during that period
    • what product and customers relates to that
    • what customers are talking about that product since the beginning of the day,
    • why do you have an order backlog list, a quality or a profitability issue.

This needs to be real time during the meeting and not a static powerpoint slide that can’t answer most of the questions that arise during the meeting. What you usually get is, yes, we understand your question and we will come up tomorrow or next week with an analysis or an answer.

Do you see the inflection point, we are living in a real time world today and we are still acting and behaving as we were in the early 2000’s.

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“…organizations need to use real time tools to map,
understand, interact and answer what their customers want.”

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Q Patrick: What then is stopping businesses from making these changes?  Why aren’t more embracing the 2020 mentality you say is imperative to business survival?

A Fernando: It’s been seven years since the LB crash. CIO’s were forced to adopt a cost center mentality. Key projects kept being postponed or not approved. Cost reduction was the word of the day. This whole scenario deferred the shift from a 2000 mentality to a 2020 mentality for a representative set of companies.  And even continues to do despite the global CEO shift to growth.  Even on the growth side, consolidations and acquisitions put extra burden on CIO’s to most cost effectively combine different platforms and manage complex change management scenarios in lieu of a more strategic transformation initiatives.  For me, those are the key examples of why many CIO’s are still forced to act with a 2000’s mentality.  No doubt, there is a big task on the CIO side to promote this mentality change within the management team.

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Q Patrick: Why is this a struggle between CIOs and their Leadership teams?

A Fernando: First, I need to expand that by leadership teams I mean more than just C-suite executives;  I am also talking about all of the key stakeholders and decision makers, those with political capital who can help bring change about.

              Second a CIO is really a Chief Change Management Officer – especially with all of the transformation that technology is imposing through all of the business.

              Innovation is competitive disruption.  ‘What’s APP’ removed billions in revenue from the SMS providers.  Uber and Airbnb are doing the same.  For manufacturers, their customers want response and availability immediately. If availability is not now, then the response better be now and it better be right. If you give them an answer based on some fact sheet, a fixed lead time guess, then the only way you can meet these kinds of commitment is with lots of extra inventory.  We CIOs, we want to replace that inventory with information.  If we enable real time analysis for the business then we can provide real time answers.  Analysts can conduct real time diagnostics to find root causes faster, solve problems, save money and make customers as well as shareholders happy.

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SAP’s HANA technology is changing  the world.  It is the key to enabling the real-time business…”
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Q Patrick: So are you saying that this massive change can put the CIO on the driver seat together with the CEO?

A Fernando:  That is spot on.  I.T. needs to a be a partner with the business;  they need to strategically enable the business to go where it needs to – now – not in 12, 18, 24 months.  Think of the situation where the CEO  needs to re-invent some portion of the business model to deal with an immediate market condition;  he needs to be able to immediately look at the CIO for the big how. How are we going to implement this quickly and cost effectively.  So, CIO’s more and more are taking the driver seat to partner with the CEO’s to change the business model and help move their entire organization to a 2020 mentality.

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Q Patrick: Thank you for your time and candor, Fernando.  It is always a pleasure speaking with you.  I hope we can do it again soon.  In the meantime, and at the expense of perhaps sounding a little salesy, are there any specific technologies you would endorse and/or want your fellow CIOs and business colleagues to be aware of?

A Fernando: First, you are welcome.  The pleasure is all mine.  I look forward to doing this again soon.   With regards to technology, I have am a huge advocate of SAP.  I have been deploying SAP ERP, CRM, BW and manufacturing solutions like MII for many years now in various countries and hemispheres.  I encourage everyone to enroll in open online courses by SAP.  Especially the SAP S4/HANA deep dive.  It was one of the best investments of my time.  The SAP HANA technology is changing  the world.  It is the key to enabling the real-time business we discussed.


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You might also be interested in:

How CIOs Are Adapting In The Digital World
Winning the Digital Battle with Simplicity by Bernd Leukert
The Boardroom of the Future Will Simplify Business at an Unprecedented Rate
Business Trends driving CEOs (from Series on Big Data – IoT – M2M)

About

Fernando Leite 3b.jpgFernando Leite  (https://www.linkedin.com/in/fleite ), – has had the pleasure of being a CIO in both the Global Manufacturing as well as Telecom sectors for the past 12 years.  He has a strong history of leading I.T. and business transformations.  He was most recently the CIO of ESAB, which prior to their acquisition by Colfax, was one of the world’s largest manufacturers of welding and cutting equipment and related consumables serving customers in the automotive, construction, fabrication, mining, power generation, and shipbuilding industries.  While there he lead several major enterprise application turnarounds in both North and South America.  Prior, he lead all product launches and IT projects for one of the largest telecom companies in South America.  And prior to that he was with one of the largest auto manufacturing companies in the world.

/wp-content/uploads/2015/08/patrick_771367.jpgPatrick Maroney is part of the SAP Global Hana Platform Center of Excellence. In this role, he works closely with SAP customers to help understand the impacts of business trends on their processes and the use of technology in order to help architect business improvements. Patrick has a background in industrial engineering and business transformation consulting. Since 1992, Patrick has been working with the management teams of leading companies on improving their processes and leading business transformation initiatives.

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10 Comments

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  1. Andrew De Rozairo

    Great interview and insights! The ‘2000 mentality’ business behaviour that Fernando describes is the equivalent of still driving around with paper maps instead of using all the real-time traffic updates, visualisation, course-correction capabilities that sat-nav technology offers us. I still think most businesses are running on paper maps.

    I think we are entering a golden era for enlightened CIOs like Fernando. As more and more people realise the value of data, and the risks of being disintermediated if you don’t learn to leverage your data (e.g. uber), the CIO becomes a key player in the exec team, and no longer just the manager of a cost center. As Bharti Airtel’s CIO said recently, all companies need to think along two dimensions: We need to make our Business Digital, and make Digital our business…

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  2. Shuchi Sharma

    Thank you for your insights, Fernando. What do you see as  the major white spots for IT departments and their stakeholders around skill development that enables this type of mindset shift and business transformation? 

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    1. Fernando Leite

      Thank you for asking this excellent question. We are talking about skills to follow a non-traditional approach. I personally like the Design Thinking approach which forces its practitioners to view  the problem from an end user perspective. There are books, classes and even a page here on SCN (http://scn.sap.com/community/design-thinking). In a traditional approach, you start with identifying an existing need which is typically based on your understanding of existing products and services; then you go through a long and expensive development process (manufacturing, selling, marketing, etc.) to arrive at a place where you deliver incremental value. In the new approach you might engage before needs are defined – some call this “Problem Finding”. You begin by exploring and discovering the ‘art of possible’ – considering emerging behaviors, disruptive technologies, and new business models. From there you go through a rapid design cycle – fall early and often – learn from small mistakes – ‘Extreme Agile’. This is how you achieve breakthroughs outcomes – this approach yelds smaller cycles of ‘making’ and larger value realization by satisfying a previous unknown and/or not understood need.

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      1. Jennifer Ford

        Fernando — Thank you for your insights as well as leading people to the merits of Design Thinking in helping them make the big jumps in their business strategy as opposed to incremental changes.  I lead the N. American Design Thinking Team for Presales at SAP and was thrilled to see this month’s Harvard Business Review cover Design Thinking Comes of Age .  The group of four articles describe the evolution of Design Thinking from a method to develop end user products to a method to help anyone, anywhere for any reason unleash the power of “How Might We?”   Working with our customers in this context has been extremely rewarding and exciting — you never know what next great idea you’re going to see materialize in the course of a workshop!

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  3. Paul Boris

    Well said, Fernando.  This is a huge blind spot for most organizations, as well as many teams within companies who “get it”.

    It seems we need to continually remind our teams, with tangible examples, how quickly technology evolves.  Setting a plan in August that carries you out 16 months in a world where whole markets emerge in that window seems obviously absurd.  Why do we allow it to continue ?

    The iPad (and modern, aka, usable tablet market) is less than 6 years old, yet we plan and choose manufacturing technologies as if last year’s tech will carry us forward for the next 10 to 15 years. 

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    1. Fernando Leite

      Thank you Paul, Managing and designing IT solutions for the future pose a very forward thinking for the CIO’s in general. The big challenge is to drive the leadership of those organizations to look ahead and show them the importance of this vision. 

      You are right, tablets are 6 years old, and there are still companies that have not adopted a structured view on this platform yet.

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  4. Joaquin Garcia Fink

    Hi Patrick, Fernando. Thanks for sharing these insights. Last couple of years have been working with many of SAP’s strategic customers and can attest on the imperative of change, the challenges that CIO face to make it happen and on the perspective to overcome those you shared in one of your comments. As such, at SAP we have a formal division named ‘Innovation Center Network’ that has as one of its main objectives to work with customers among the lines you described based on DT and Extreme Agile. The results can be phenomenal, many of them get to be showcased in SAP premier conferences such SAPphire and SAPTechEd.

    Fernando, if possible, would be great to gather your perspective on the following: many organizations respond to the needs of the organization outlined in your interview by establishing the role of a Chief Innovation Officer. Do you see any drawback on this approach as opposed to the one where CIO takes on these tasks and responsibilities? Many thanks in advance.

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    1. Fernando Leite

      Hi Joaquin, thanks for your comments and insights. This question is a very interesting one. My view is once an organization reach to a point to decide to create a chief innovation role is because innovation is key and highly valued. I do not see any drawback to the CIO position. If is properly managed this is a position that not only complements the CIO position as well as strengthen the overall innovative approach for the company. For me, when those initiatives are pursued, they end up positioning the  organization on the cutting edge of technology and generate strategic competitive advantage on today’s business environment

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  5. michael novac

    Patrick & Fernando:  Great, timely interview.  You touch salient points regarding emerging integration/evolution of technology (Big Data/IoT) and business processes.

    A new book was published that you may be aware of by Gartner’s Mark Raskino and Graham Waller,”Digital To The Core”.  It contains a framework and examples of how companies such as GE and others are redefining how markets operate and what products can do.  As Fernando stated above, “Today’s business leaders need to break free of these past paradigms and embrace disruptive technology to solve the big problems no one has thought were solvable.”

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    1. Fernando Leite

      Michael, thanks for your comments and insights. I will check on the books as it seems to address the disruptive technology and how companies are seeing and exploring this. I will be willing to more and more investigate examples and real case scenarios.

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