Tech-savvy businesses use data to streamline operations, improve efficiency, and enhance the customer service experience. Which means business schools need to produce graduates with a broad understanding of how technology can permeate every aspect of the organization.
Bordeaux, France, is going digital. In recent years, it has introduced the "digital city" initiative, which papers the town with QR codes that people can scan with their smart phones to learn about everything from flora in the parks to schedules for public transportation. It has also launched a sort of city credit card, which residents can use to pay for public services that range from museums to pools to school lunches. And which farsighted city official was the driving force behind both initiatives? Pascale Avargues, the city's chief information officer.
"People used to dismiss CIOs as nerds who make sure everyone in the company gets their emails and can access the Internet," says Nils Olaya Fonstad, associate director of INSEAD eLab, based in Fontainebleau, France. But today's CIOs play a far more central role than merely running the tech, he says. They understand the company's overarching goals. They know how to use technology, and the data produced by technology, to improve the organization's operations. In short, they know how to turn technology into a competitive advantage.
But as technology becomes more critical to running any kind of business, it becomes necessary for all top managers—not just CIOs—to have an understanding of how it works and what it can do. "I wouldn't say they need to learn how to connect the Internet switches," says Marc Hoit, vice chancellor for IT at the Office of Information Technology at North Carolina State University in Raleigh. "But they need to understand the merger of business and technology."
The technology that runs today's businesses is so pervasive and so interdependent that "things like standardization and integration are no longer just nice things to have—they're essential to competitiveness and innovation," says Fonstad. When top managers have a broad understanding of digital data, they can "identify the synergies that enable the company to develop new products and services," he adds. They can use IT to fine-tune business processes, improve customer service, and innovate and operate more efficiently.
For instance, Fonstad describes MAPFRE, a Madrid-based insurance company that was able to standardize key customer data to determine why certain customers were leaving—and create a new policy that would retain them.
Because CIOs are the ones managing the complex, interdependent data systems, says Fonstad, "they're the ones with the most holistic view of their organizations. If CIOs are spending all their time on managing technology, I would argue that their organizations are wasting money."
He'll hear no dissent from Martin Frick, director of the Executive Education Programme and HR Workgroup at the European CIO Association (EuroCIO), based in Brussels, Belgium. "In most businesses, even nontechnical ones, IT has become core to the business model," Frick says. "Only if the CIO acts as a business manager can you get the full potential of IT in the organization. It should be possible for the CIO to become the CEO of the company. But that means the CIO must develop the right skill set."
Fonstad agrees. "Businesses increasingly want employees who have t-shaped portfolio skills," he says. "The vertical dimension represents deep expertise in a specific area, whether that's in business processes or products. The horizontal dimension represents an ability to manage IT interdependencies. People with these skills know how to take the data generated by one business unit and use it within a different business unit to help develop new products."
The trouble is, individuals with those skills are in short supply—and growing more scarce. "As more organizations recognize the importance of hiring graduates with these skills, the demand has increased, while the supply is shrinking," says Fonstad.
That's also been the conclusion at EuroCIO, which has forecast a shortage of chief information officers in the future. The solution? Encourage business schools to develop programs that will give graduates a balanced grounding in both management and technology.
Hoit asks the obvious question: "How do you prepare students for business careers that encompass scientific and technical knowledge? For instance, logistics is a hugely mathematical problem, one that civil engineers have been solving for years. Is the answer to make sure every student earns an engineering degree before going to business school?"
Maybe not, but experts believe business students need to learn the technology alongside the functional disciplines to understand how the two relate. One approach is to develop special classes and full programs that integrate business and technology (see "Education at the Intersection," facing page). But there are other ways that schools can make sure business students understand technology's vital importance to the organization:
• Expose students to real-world expertise. INSEAD's Fonstad recommends three strategies: inviting practitioners into the classroom, sending students out to conduct projects for actual organizations, and launching research centers on campus. All three approaches enable students to interact with executives and see how academic theory can be applied to practical challenges.
• Encourage business students to acquire specialized skills. Hoit advises his students to develop expertise in a functional business discipline—and a technical skill to back it up. He suggests they acquire this specialized knowledge through minors, dual master's degree programs, or second degrees.
He adds, "If I'd wanted to be an orthopedic surgeon, I would have started with a mechanical engineering degree to learn about joints before I learned about medicine. Today, if I want to run a business based on logistics, I'd learn the math behind it before I studied how companies like FedEx and Walmart have optimized that math to run better businesses."
• Develop partnerships with other schools and universities. Teaming is a good strategy for business schools that want to add technological depth to their programs but don't have the resources on hand. In fact, EuroCIO has sponsored this strategy among several European schools that are starting to offer a range of programs in IT and business.
The first EuroCIO MBA for Corporate Information Management was launched by Nyenrode Business School in conjunction with Delft University of Technology, both of the Netherlands. This EMBA in business and IT has been so successful that it is being expanded into additional European universities. EuroCIO's first Professional Programme in Business and Enterprise Architecture, which focuses on business and management elements more than technical design, launched in September 2012 as a collaboration between Henley Business School in the U.K., Ecole Central Paris in France, Technical University of Munich in Germany, and TiasNimbas Business School of the Netherlands.
EuroCIO has focused on executive education and EMBA programs because its administrators believe that candidates are more likely to benefit from such offerings if they've had enough professional experience to "appreciate the problems in the first place," Frick says. "Marrying professional experience with academic experience is what makes these programs relevant."
• Target likely candidates for such programs. Potential students might be older working CIOs who want to become top business leaders or ambitious mid-level managers who want to optimize the role of technology in their organizations.
In fact, the new programs sponsored by EuroCIO so far have drawn three types of people, says Frick. "About 50-percent have a technical background, 25-percent have a business background, and the remaining 25 percent are people from SMEs," he notes. "All of them would like to merge business and IT in order to run their companies better."
Says Hoit, "CIOs used to start out in operations, sometimes as facilities managers. They knew how to keep the technology running and the infrastructure sound." But as they've become strategic business partners within the organization, they've recognized the need for more business skills. He believes that many of them will start out by getting undergraduate degrees in math and science, and then take master's business courses to learn how to apply this knowledge within the organization.
With business schools already struggling to pack the curriculum with all the necessary pieces—from ethics classes to global consultancy projects— it might be hard to convince administrators to add the technical element. Fonstad thinks the answer is to provide tangible proof of how valuable technology is to the organization. He has worked with CIONET, an association with nine regional offices in Europe, to produce 2011 and 2012 editions of "The IT-Enabled Leadership Report" (www.insead.edu/elab).
To compile the report, Fonstad and his fellow researchers survey more than 100 European CIOs, using a survey tool developed by Peter Weill and Stephanie Woerner at MIT. They also ask regional offices of CIOnet to nominate candidates for the European CIO of the Year award and interview the nominees to learn how they spend their time. Profiles of the top nominees appear in the final report.
"This is a fantastic way to explain to non-IT colleagues that IT professionals today don't simply manage technology," says Fonstad. "They also manage business processes and enhance the customer experience."
As digitization becomes more prevalent, he continues, it becomes even more essential that business schools prepare their graduates to operate in a tech-enabled world. "I believe digitization is following the same evolution that outsourcing did," he says. "Initially, businesses outsourced the easy, repeatable, commodity-like services; today they outsource complex business processes. Similarly, businesses originally digitized easy, repeatable processes, but now the most complex areas of businesses are digitized—and must be managed by someone who understands their complexity."
Frick agrees that in today's world, where everyone can buy databases, technology alone isn't a competitive advantage. The advantage rests in how an organization uses it. "Deploying technology requires a true understanding of the business model of your company so you can decide which initiatives will be successful and which ones won't because they do not achieve your fundamental goals," he says.
As businesses bring technology into the boardroom, business schools need to bring it into the classroom. Tomorrow's CEOs won't need to connect the wires and switches—but they will need to connect the dots between what the business wants to do and what technology can deliver.
Full Tech Ahead
What are some of the major technology trends that tomorrow's business manager will have to understand to manage the IT function? NCSU's Marc Hoit briefly describes four of the most important ones.
• Big Data. This refers to the amount of data that organizations are now filtering to solve their biggest scientific issues. There are new machines capable of creating half a terabyte of data a day, and major research centers have several of these machines. In the past, only large research entities—like the government, laboratories, and major universities—could afford these machines. But now they're available for about 100,000 USD, and costs will continue to decrease. That means access to them will increase, as will their capabilities.
Big Data can be used by scientists to study everything from genomics to disease patterns; by city officials to improve traffic flows; and even by the fishing industry to track coastal weather patterns. Credit card companies have always used Big Data to detect fraud, but now they can do so from the second someone swipes a card. And Facebook, Google and other groups rely on social media data to help their clients reach customers and make decisions.
Because Big Data will be used by more organizations in the coming years, managers must learn how to tap its potential most effectively. And because many business schools already own the number-crunching machinery that will correlate massive data trends, I believe they will become the natural sites for Big Data research in the future.
• The Cloud. The term has come to mean many things, but this is my current definition: The cloud separates the infrastructure you need from the services and applications you want to run. For instance, when individuals use apps on their smart phones to ask for directions, they don't care what kind of Big Data has to be crunched behind the scenes for them to get their answers. They just want answers. Because so much data and so many software applications are working together in the cloud, those answers can be supplied without any effort from the user.
But the cloud is going to be so much more. It's going to allow people who can't afford Big Data tools to have access to those tools cheaply. Right now, you can rent from Amazon the ability to do things that ten years ago would have cost millions of dollars in infrastructure, hardware, and expertise. The cloud is making a range of complex calculations and searches cheaper, simpler, and more accessible.
• Mobility. We're no longer stuck sitting in offices or research labs. No matter where we are, we expect to use our laptops, our tablets, and our smart phones to retrieve any information we need. Mobile technology encompasses how to access that data, how to keep it secure, and how to make sure we have enough bandwidth to send and receive data. It also considers questions like, "How can we translate research data from 20' x 10' research computer screens to 4" x 3" cell phone screens?"
• Online Education. Online education touches every level of school from kindergarten through the university, and it is affected by diverse forces that range from the growth of for-profit schools to the reduction of state funding for education. While much of the talk is about how online delivery helps schools lower costs and reach a wider student base, I think a more important issue is how it will enable schools to develop more partnerships.
Right now, in the North Carolina State University system, we're working on ways to share foreign language courses. With budget cuts, none of the schools can afford to teach the full complement of languages we would like to offer. But if we decide one school will be responsible for the faculty and resources to deliver one language, and another school will deliver another language, we can share costs and services across boundaries. We're sharing resources within the state, but other institutions can share them across states or across nations. The practice of sharing has been in place for a while, but, in the near future, it's going to explode. These technology trends tie together and reinforce each other, and they will be among some of the biggest issues that will shape business in the future. Business schools need to prepare their students to deal with them by offering programs that teach functional business disciplines within the context of technology.