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Old IT procurement practices can’t match the fast pace of the digital economy

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My latest IDC PeerScape report ($$$$) describes how several CIOs are revamping IT procurement and vendor management to get in sync with a fast-paced digital economy. They’re dealing with more vendors (including startups) and more contracts, which are refreshed more often because of the quickening pace of technological change. Readers will notice some clear themes: fewer traditional RFPs, more proof-of-concept tests, and higher CIO expectations from the vendor relationship.

The advice from leading CIOs is this: Streamline the bureaucracy, automate the workflow, learn to deal with innovative startups, and demand more business value from your vendors.

These insights come from interviews with:

  • Greg Tacchetti, chief information & strategy officer at State Auto Insurance
  • Ken Piddington, CIO at SGR Energy Inc.
  • Niel Nickolaisen, CTO at O.C. Tanner
  • Raman Mehta, CIO at Visteon Corp.

Related: CIOs NOT working with startups are falling behind

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The clever way that Stitch Fix gets more data to feed its style-matching algorithm

Screen Shot 2019-03-30 at 5.42.31 PMMy latest article for editorial website CIO Dive profiles Cathy Polinsky, the CTO at Stitch Fix Inc. It’s the fast-growing (and now public) online clothing retailer known for having personal stylists — backed by data & style-matching algorithms — select items customers might love and deliver them in a box.

In about two and a half years, Polinsky has:

  • doubled the size of her team so it could support, rather than constrain, the burgeoning business
  • helped Stitch Fix expand into additional markets: menswear, plus sizes, “extras” (such as socks & underwear), and kids
  • supported international expansion — starting with a launch in the U.K. later this year
  • adapted systems to Europe’s General Data Protection Regulation, the Sarbanes-Oxley Act, and California’s privacy law

My favorite part of the article covers the clever way that this company gets additional data to improve it’s style-matching algorithm.

To gather even more clues about customer likes and dislikes, Stitch Fix developed an application called Style Shuffle. The Tinder-like game shows a series of clothing items and lets clients give each one either a thumbs-up or a thumbs-down — thus providing more data to feed the style-matching algorithm.

“Clients love it. It’s super engaging. It’s fun. We have over a billion ratings now on this platform. Over 75% of our active clients have tried it at least once. Clients who have played with Style Shuffle have better ‘keep rates’ — they’re keeping more items because we’re sending more relevant items and really getting their style,” Polinsky said.

The company must be doing something right: Stitch Fix reported net revenue up 25% from last year in the second quarter of 2019. The number of active clients increased 18% to 3 million — and on average they each spent 6% more than the previous year.

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Reinventing the IT department for the fast-paced digital economy

My latest IDC report ($$$$), “Reinventing the IT Department as a Business Accelerator,” is the result of interviews with five CIOs about they got their IT departments to be more business-focused. The traditional, tech-focused IT department is a bad match for the fast-paced digital economy. But what do you replace it with? There are numerous ways IT departments can become more business-focused, e.g., embedding IT professionals in business units, or creating cross-functional teams. One company even changed the name of its revamped IT department to Digital Services.

I started out thinking this would be a report about IT reorganizations; instead, I found that this is less about changing boxes on the organization chart and more about getting IT professionals working with their business peers to co-invent the future of the business.

I’m grateful to the following CIOs who let me pick their brains for this report, which will be read by other CIOs seeking inspiration.

  • Glenn Schneider at Discovery Financial Services (and a member of the CIO Hall of Fame)
  • Trish Torizzo at Houghton Mifflin Harcourt Co.
  • Bill Martin at AEG Worldwide
  • Raman Mehta at Visteon Corp.
  • Deepa Soni at BMO Financial Group (U.S.)

Related: Dear CIOs: Speed matters

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Digital Business newsletter: an update

I’ve been producing the Digital Business newsletter for almost six months now. I’m up to about 73 subscribers — some journalist/cronies, some CIO-types, some competitors. Recent lead stories have included:

Each issue also includes brief summaries of digital initiatives; and a list of job openings and career moves of digital executives. One conclusion from my newsletter research is that more and more digital executives (e.g., CIOs) are being appointed to the board of directors at other (non-tech) companies, thus adding much-needed digital expertise at the board level.

My goals in 2019 are to produce more-but-shorter editions, at a steadier pace — and then figure out when to start charging a subscription price (though some editions will remain free, as a showcase of the valuable content).

Related: Debut of the ‘Digital Business’ newsletter

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Houghton Mifflin CIO revamps IT to modernize the textbook publisher

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Trish Torizzo, CIO at HMH

My latest article for editorial website CIO Dive is a profile of Trish Torizzo, CIO at Houghton Mifflin Harcourt Co. (HMH) after about a year on the job. Her goal is to modernize the back office of the book publisher amidst a business turnaround. (HMH is trying to evolve from print classroom textbook publisher to providing software-based tools for education.)

So far, Torizzo’s team has accomplished the following:

  • revamped the IT department to focus on the needs of business teams
  • developed an online self-service application so customers can determine the status & whereabouts of their orders (without a phone call)
  • introduced the company to robotic process automation (RPA), resulting in two ​”digital workers​” (RPA bots) that can log into systems and perform repetitive tasks in the finance department.

Overall, the new IT operating model sets the stage for more business/IT collaboration and innovation, as well as a greater emphasis on the customer experience.

Related: The digital transformation trends in education