Where to next for IT Strategy?

A CIO recently asked my view on IT strategy in the five-year boardroom horizon. Here is my response.

There is an inevitable trend towards deep immersion and intelligent interaction with customers at the moment of consumption. The channel for this is a "smart layer" integrating the "Internet of Things", analytics, pervasive devices, behavioural marketing and content delivery providers.

Business knows the benefit of integration with production and supply chain. Extending and deepening a "neural response" to partners and customers, hungry for lower cost or better experience is already in train. We have seen banking and retail channel revolution; cost and risk reduced with improved consumer experience.

I see this moving much faster and further with an IOT Smart Layer. If products tell us where they are located, when and how they are used, and can respond intelligently; What could be achieved? What would you do?

Younger generations allow business subtle intimacy if it provides a rewarding experience. This is evident in growing use of mobile payments. Fit young people may, for example, choose cheaper health, life or car insurance in return for wearable devices providing their health status or location.

Custom-built products based on IOT-provided data creates enormous opportunity. Learning how much product is wasted at consumption enables a manufacturer or retailer to package, price and deliver with better environmental impact, increased profit, competitiveness and satisfaction. Products and services can be individually customised and delivered at the consumer's convenience.

Marketing and promotion will be executed with laser precision, be far more pervasive and conversational. Consumers can be instantly advised when the product they have used has a promotional prize and further offers and rewards made.
Smart fridges that know their contents will initiate targeted advertising via Smart TVs, Tablets or wearables when content or apps are accessed. "Tomorrow is going to be a warm day for your barbecue. XYZ has a "just for you" discounted price for your guests' favourite beverages delivered chilled and in time for your event."

Branding can be enhanced. If customers are environmentally aware, could you recognise and thank them as diligent recyclers of your containers because their phone or home hub told you?

Business to Business is not isolated from this. Enterprises will demand the same responsiveness and interaction from their services providers their customers want. Security and privacy management is a commodity to be negotiated and managed in real time. The focus will be on staff efficiency, supply chain, cost reduction and end-consumer experience delivery. New channel and integration specialists will enable the assembly and execution of these strategies.

Where is this disruptive force at? Work is advanced and standards emerging. Smart sensors are programmable and cost falling as scale, and interoperability standards grow. Gartner and Cisco predict between 20 and 30 billion connected devices in the coming 5 years. Business,regulators and consumers face challenges securing billions of interacting internet sensors; a concern recognised for the last two or three years.

Today, these devices are already common - but they aren't fully integrated. You can talk to a Smart TV. Your personal Point of Sale sits in a pocket or purse. Home hubs and technology relay personal data events via the internet to businesses. I counted twenty-one such devices in my four-member house. Smart electricity meters and addressable lighting optimise consumption. 

We are used to seeing analytics-driven customised advertising on social media and Google. Machine learning and intelligent response is advancing exponentially.  IBM's Watson system famously beat the best minds on TV's "Jeopardy" quiz, and is now solving large-scale complex challenges using intuitive machine learning.

Mobile technology is incredibly positioned to exploit real-time interaction if coupled with a smart-layer back at the office. I recently saw a demonstration of 3D mapping by a quad-copter and base station equipped with a high definition camera guided by an internet connected ipad far away. Resolution was down to less than 2cm (1 inch). This image build up was not developed by Google Earth - but by an enthusiast using freeware and standard technology.

The next two years will see to smart fridges and other household appliances proliferate the way flat screens did to TVs. Venture capital and kickstarter funds are creating Home helpers. Robots such as Jibo are interacting intelligently, friendly, recognising faces, voices and habits. These helpers are designed to educate and entertain, manage household administration, shop and keep an eye on both young and older family members.

The complexity CIOs faced managing BYO devices pales in comparison to responsive systems and the Internet of Things

CIOs will need to take a multi-tiered approach beginning with raising awareness, mapping and orchestrating business processes to adapt to new information, sales and delivery channels, adopting an IoT Application and security architecture, Access capability to exploit existing initiatives and leverage emerging capabilities. 

We will discuss getting started on execution in a subsequent article

In the longer run, consumer immersion will extend the integration of  analytics and connected devices, into responsive "smart layers" that respond in real time to the customer in a secure and valuable way.

CIOs will create production houses for interactive customer experiences in the same way Games design works today. Marketing departments will create "Data logistics" and "Behavioural response" units to design and deliver positive, subtle and useful immersion alongside new channel and service providers. Intuitive, "just in time logistics" is extending from the supermarket to the home fridge and the lounge room.

Seven years ago, using a phone to pay for products over the counter or online was fantasy. It was the mobility explosion that finally unleashed the latent potential of Dotcom. Behavioural response driven by a smart layer is not seven years away.

Sensor-based data gathering and interconnection is a reality today and growing in complexity. Most enterprises are correctly laying foundations for big data, but there is much more to prepare for. The question becomes what does business want to do when, not if, this pervasive technology hits and becomes accepted?

Look for the next article on steps to execute.

Pierre Nunns