It started as a research project to explore how Steelcase's customers might benefit from products with built-in collaboration technologies. What emerged is Media:Scape, a line of high-tech multimedia office equipment that is now on the sales fast track at the Grand Rapids, Mich.-based office furniture manufacturer. Steelcase's IT department was front and center in the innovation effort, developing, building and managing the first prototypes of the products, which feature high-definition videoconferencing capabilities.
"You have to show the business the possibilities," says Steelcase CIO Bob Krestakos, who with another colleague holds the patent for the HD video technology. "One of the big insights IT was able to bring [to product development] is the power of video in sharing data and collaboration."
Show -- don't tell -- the business how to capture a competitive lead: That's the mantra of today's IT leaders, who increasingly are making their mark by devising new products and services that generate revenue and set their companies apart from the competition.
Rather than simply proselytizing about innovation, the 2013 class of Computerworld Premier 100 IT Leaders and their teams are bringing to life what IBM CIO Jeanette Horan calls "the art of what's possible with IT."
At $8 billion W.W. Grainger, CIO Tim Ferrarell's team is the driving force behind cost-cutting inventory management processes and services that the Lake Forest, Ill., industrial supply giant first used internally and is now selling to customers as an application.
Over the years, Grainger's catalog, which contains more than 900,000 products, has grown to the point that it is no longer easily portable, Ferrarell explains. Now, thanks to inventory management services provided at customer locations and via mobile technology, Grainger can insert itself directly into a customer's purchasing process.
"These technologies are fundamentally changing how we serve customers and how we do our work," Ferrarell says. "We are the first in our industry to offer mobile apps to customers and are rapidly expanding mobile capabilities into new features designed to save customers time and money and to ensure Grainger's offer is accessible real-time and closest to the point of need."
The upshot: Over the past year, mobile traffic to Grainger's site has increased 400%.
At Chicago-based Hyatt Hotels, IT is "the real thought leader" in developing new services that differentiate the hotel chain in what John Prusnick, director of IT innovation and strategy, calls "the sea of sameness" permeating the hospitality industry. One recent innovation: an airport-based check-in service that lets guests bypass the front desk and go directly to their rooms on arrival. The iOS application, which was designed and built by IT, can scan credit cards and encode room keycards at the airport shuttle center.
"Guests became quickly enamored with the experience. They felt like they received VIP treatment," says Prusnick.
If you take a closer look, you'll see that what makes these IT leaders so successful in gaining a competitive edge is a rock-solid foundation in three critical areas: process innovations, talent management and technology investment strategies that carefully balance risks and rewards.
They also share a reverence for speed. Without it, they say, you're just another also-ran.
"Our customers are more tech-savvy, so you can't go anywhere without being fast or you won't be around very long," Grainger's Ferrarell explains. "We take the topic of speed very seriously. We're always finding ways to drive shorter cycle times for projects and better response times for systems."
For example, Ferrarell has applied the lean management methods that Grainger uses at the corporate level to internal IT operations. Additionally, IT is being restructured into three separate groups -- labeled plan, build and run -- with each focusing their efforts on an individual business process. The result: greater speed and productivity.
"In application development, there's this little evil problem called task-switching," Ferrarell explains. "When a developer is managing the relationship with the internal customer, plus building things, plus making sure they start running, they're switching back and forth and can't be very productive." The grid structure was designed to alleviate that, he says.
"One of the concerns of this structure is that if a person is only doing one thing, will the job still be interesting? But we're building in processes that give people the ability to cross-train and move through the structure," he explains.
Grainger is also among the earliest users of SAP software to adopt agile development.
"There aren't a lot of people in SAP shops using agile yet. It's really just starting," he says. But in the name of speed, Grainger has jumped in with both feet and uses agile methodologies in more than 40% of its development work.
Transportation and logistics giant UPS is investing roughly $1 billion a year in IT. The overarching goal is to gain a competitive edge with new product offerings, faster service, safer operations, and proactive problem identification and resolution throughout the entire supply chain.
An industry first for the company is the rollout of a personal supply chain service known as UPS My Choice, which lets consumers set their individual preferences for how they interact with the company.
On the Fast Track
A CIO on the Factory Floor
If IT were in charge of a manufacturing plant, how would things be different? And might they be better?
That's exactly what Steelcase's senior leadership wants to know. To find out, it expanded CIO Bob Krestakos' role to include heading operations at two of its manufacturing plants. Managers at both plants in Grand Rapids, Mich., now report to Krestakos.
"At first, it caused people to really scratch their heads," Krestakos concedes. But it makes perfect sense if the goal is to learn what opportunities there might be to leverage technology in a manufacturing operation, he says. "You get technology people closer and closer to that part of the business."
In his expanded role, Krestakos is closely examining data flows at the plants. "A big part of our organization is around managing data. As product data flows through the life cycle, it's a huge process-oriented task," he explains. "We're looking at how well we understand incoming demand and how we leverage existing technologies. We're looking for new and interesting use cases," he explains.
"You can reroute a package, you can authorize packages for drop-off somewhere else if you're away, you can indicate when you will be home and get alerts on the status of your package," says Juan Perez, vice president of information services for the Atlanta-based company.
"What we've done is take a new approach to managing personal supply chains. Having that level of connectivity with our customers is going to change our business now and in years to come. The integration with consumers is what is enabling revenue growth," he says. In MyChoice's first year, more than 2 million customers signed up for the service, which delivered more than 25 million packages.
A second prime area of tech investment for UPS is data analytics -- an effort whose goal is to drive better business processes, Perez says.
Over the past several months, the company has deployed smart scanning technology that works to proactively identify potential errors in loading packages onto trucks. UPS is also making extensive use of sensors and telematics in all of its vehicles.
"We have sensors that capture information about the vehicle and the driver's behaviors. We marry that information to delivery and acquisition information, and we can get a complete picture of how a driver is completing his work, day in and day out," Perez says. "That has incredible consequences for the way we manage the business across the board."
Horan and her team at IBM also are keenly focused on data analytics, working closely with the company's Data Analytics Center of Excellence to help business people determine what questions they need the data to answer, she says.
The goal, she says, is a perfect marriage of business understanding with analytical methods, which can yield significant revenue. One recent project, which involved optimizing sales coverage in the 170 countries in which IBM operates, yielded a 10% performance improvement in territories where the models were applied.
A Perfect Role for IT
At Johns Hopkins Health System, CIO Stephanie Reel says IT is adept at innovating business processes because it is the one and only function with full visibility into the entire enterprise. "That's why process and technology innovations go hand in hand," she says.
Last May, Johns Hopkins opened a new 560-bed, all-digital hospital. "It's completely paperless and filmless. It was a rare opportunity for me and my team to get in on the ground floor and build a patient-centered facility focused on science and safety and to blend it with medical education," she says. "The workflows changed dramatically."
Among other things, IT needed to take into account how nurses, physicians and other staff would use various new wireless devices and an all-new communications system. It also considered how patients and patients' families would use technology.
For example, "we worked to understand the fact that the new building would have all private rooms and that the nursing staff would not be confined to sharing small spaces," Reel says.
On the revenue-generation side, Reel, who also serves as CIO for Johns Hopkins University, says there is great potential in international business.
"Johns Hopkins has a large intellectual presence in about 80 countries around the world. We provide consulting services, so we need to provide technology that promotes collaboration," she says. As Johns Hopkins goes through reform on both the healthcare and higher education fronts, "we have to look for new opportunities for revenue generation," Reel says. "Providing online content and online education and telemedicine opportunities are all opportunities possible with a robust IT infrastructure."
IT's evolving importance in creating new and differentiating products and services means recruiting and retaining the best and the brightest. This requires assiduous talent management, IT leaders say.
"It all starts with having the right talent," says Krestakos, who notes that Steelcase maintains strong ties to local universities and runs an IT internship program that has supplied IT with some of its best talent.
Krestakos also regularly rotates high-potential IT staffers into different functional areas "so they can be immersed in the business," he says. "I call it a kind of loaned executive program. We put people in different assignments and have them help the business but also help their own development. When they come back to IT, it's with a broader understanding of the business. It always pays dividends."
At Hyatt, which must work hard to distinguish itself in the crowded hotel business, "we need to make sure we have IT talent that is not your traditional IT talent that sits in the basement, but people who are customer-focused and pay attention to the value they provide guests," says Prusnick. "We want to make sure [IT staffers are] working with the hotel leadership to help find ways to use technology to engage guests. Revenue generation can happen in multiple ways. IT has become a real thought leader for [figuring out] how technology can be monetized in a way that will easily be accepted by the market."
To help find answers, Hyatt designated eight hotels around the world as "lab hotels" where new concepts can be tested quickly. Working with more than 500 Hyatt colleagues, guests and outside experts during the course of 40 idea-generation sessions in several cities around the world, IT and business teams came up with more than 1,500 ideas and shared existing projects and concepts in development that could be shaped to deliver new guest experiences.
The bottom line is that "IT needs to transform its focus to thinking and envisioning," says Prusnick. "This is what enables IT to be an integral part of the business."