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How CIOs can influence new product innovation

Kim S. Nash | Sept. 27, 2010
What we haven't heard much about yet is how this Internet of Things could put CIOs at the strategic heart of new business models and strategies

Protector.com is due out within the next month or two. Meanwhile, Taser is testing the technology with various combinations of devices, Rivera says. "When you're offering products that are Internet-based, you're a vendor," he says. "As a vendor, [customer] expectations are completely different." Taser formed separate business units for both Evidence.com and Protector.com, each with its own technology budget. But as corporate CIO, Rivera has a firm hand in both, with his IT talent directly involved with product development for those units. As a small company of 360 employees, that model works for Taser.

At larger companies, that kind of separation could cause problems later, notes Sony Electronics CIO Martin. Where the IT group remains distant, he says, R&D groups may outsource the technology work that goes into connected products. "Helping [to] source technology talent is important, whether it's from your IT staff or a third party." If the product group goes outside for IT staff, he adds, knowing all the details about which contractor is providing which people for what fees will put the CIO in a stronger position in any future negotiations with that vendor, he points out.

Shake the Pillars

Once companies analyze the data around how people use a product or service, CIOs and other business leaders can help their companies create new business models. DiMarzio sees big things ahead for Mazda. Knowing the minutiae of customer driving habits, for example, would let the company finely segment its customers to market to them better. "We could come up with service plans or extended warranties on a granular level" that produces more revenue, he says.

Yet it doesn't escape notice that continuously upgrading the digital guts of a smart product, rather than urging consumers to buy a brand new one, shakes at least one pillar of the American economy: planned obsolescence. If a car or refrigerator gets better over time, companies must shift to charging for it as a service instead of selling it once and assuming a replacement cycle kicks in, says McKinsey's Roberts. But that key change depends on IT, he says, compelling smart CIOs to envision what new capabilities the business will need, what new skills IT must possess and which new relationships to establish.

As CIOs bring core IT knowledge to bear on product design, they entrench themselves and their IT organizations deeper in the company's business strategy. That's right where you want to be, says Sony's Martin. The CIO will want to spend time in the area where the company is trying to differentiate itself from competition, he says. "That's not in managing data centers."

 

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