CONTRIBUTOR
General Manager and Editorial Director,
Techstrong Group

Synopsis

In this Digital CxO Leadership Insights series video, Mike Vizard speaks with Don Schuerman, the CTO for Pega, about the future of IT and a new report they just released.

Transcript

Mike Vizard: Hey, folks, welcome to the latest edition of the Digital CxO video podcast. I’m your host, Mike Vizard. Today we’re with Don Schuerman, who is the CTO for Pega, and we’re gonna be talking about the future of IT and a new report they just pushed out. Don, welcome to the show.

Don Schuerman: It’s good to be here.

Mike Vizard: The report seems to cover a wide range of things, everything from low-code to automation to artificial intelligence. I guess the question people are having with this level of transition is: is IT more important? Are the IT people less important? What are you guys picking up as the general theme of the report?

Don Schuerman: Look, I think IT leaders are more important than ever and more central to the organization’s strategies. I think over the past 18 to 24 months, the old truism about every company being a software company – it was Marc Andreessen who originally said that – I think it’s become more true than ever.

The organizations that we work with are increasingly thinking about the digital platforms, the core technology that they use to drive their business, that they use to engage employees, that they use to engage customers, that they use to find new sources of efficiency and cost savings in the business. That means that the IT leaders really need to get their hands on the steering and take not just that technology forward, but take the skills of the organization, and in some cases even the culture of the organization forward to move with that kind of change that’s happening.

Mike Vizard: What kind of relationship should the IT leaders have with the rest of the digital CXOs in that C-suite? Because historically, there’s always been something of a divide. Is that narrowing? Is it all gonna be just one big happy C-level suite or do we got work still to do?

Don Schuerman: No. I think we’re gonna continue to see – you know, one of the things we found in our report was a high-level – I think 68 percent of IT leaders are talking about dispersing functionality or dispersing responsibility into different functions of the business.

A great example of that is this whole move towards low-code. What low-code means is I start pulling people outside of the traditional IT function, business analysts, businesspeople, business experts, and actually involving them in how we build the applications, how we automate processes. That’s a great example of how that dispersion happens.

But that doesn’t mean that IT can just sort of step away and forget about it. In fact, in means that there’s almost more need of an IT leader to provide governance, to provide training, to provide the kind of guidance and experience that these now increasingly distributed and oftentimes non-IT teams will have as they impact the underlying software and technology platform of a business.

Mike Vizard: I look at a lot of the tools that we have now. Low-code is everywhere. We’re seeing the beginnings of AI and there’s more automation than ever. I can’t help but wonder if we’re reaching a point now where IT is moving faster than the business can absorb, because for years the business was always yelling about how slow IT is, but maybe the shoe is on the other foot now.

Don Schuerman: I think we have definitely reaching a point where technology is moving faster than people can absorb it. I think that we’ve hit an inflection point where the pace of change is accelerating faster than most human beings can keep up.

I mean I for one, I can’t keep up with the latest sets of technology that our cloud engineers are using to move things forward, the Kubernetes of the world and the different flavors of that and the different iterations of containerization. Every time I go talk to a frontend developer they’re telling me four new different frameworks that they’ve started to plug in to build their frontends. The technology is just moving faster and faster.

One of the interesting things that we saw in our study was the shift of what is important now versus what will be important in the future is changing. So about 39 percent, 40 percent of IT leaders said that coding _____ was a really important skill now. Less than 30 percent actually think it’s gonna be as important in the future.

Instead, what you see is the rise of importance of do you have computations skills. Can you think in a way that reflects the digital world? Do you have problem solving skills? Do you have emotional and social skills? Do you have leadership skills?

Those kinds of capabilities are sort of the rising tide of skills that we’re seeing IT leaders looking for. I think that reflects the fact that we’ve got to engineer organizations that are culturally and in their employee base able to change, and not build them around a specific technology that exists today, because that’s gonna be gone or changed in two to three years, but build the organization to be continuously learning and absorbing and taking advantage of new technologies as they become available.

Mike Vizard: I think when we see a lot of the advances in automation, a lot of the IT people feel somewhat threatened. I wonder if that’s a legitimate concern, or are things going to be maybe more enjoyable on the IT side because I won’t be doing such manual labor, and the drudgery will go away and we’ll be able to do some things that are maybe more interesting?

Don Schuerman: I don’t think that IT people should feel threatened. I think what they should feel though is that their role is going to shift, and your value is going to become less and less as can you translate into syntax, the particular code syntax. Because guess what. If you think about it, low-code is just automated coding, right. Low-code is really just coding that’s now being automated by visual tools on our behalf.

But I think where the opportunity for IT is, is you are now moving into a much more strategic role, where your job is not to automate the base-level tasks, whether that’s system operations, whether that’s testing, whether that’s coding. We’re going to have cloud-based software that automates a lot of our operations. We’re gonna have DevOps that automates a lot of the tests. We’re gonna have low-code and other tools that actually automate a good portion of the coding.

But what that means is that as IT leaders, we need to actually be thinking into the future about what the impact of technology is going to be on the business. How is it going to allow us to differently engage our customers, to find new opportunities for efficiency? And how are we enabling a culture in the business to universally take advantage of that technology, not just through a traditionally sort of centralized IT organization?

Mike Vizard: One of the things that leapt out at me in your survey was how much of an issue there is with data management still, and I think it’s been around for decades. Very few organizations I know would get a Good Housekeeping Seal of Approval for the way they’ve been managing data.

Are we gonna get better at that? Because if I look at all these digital initiatives, at the end of the day they all ride on how well we manage the data. Yet, we’re maybe not so good at that.

Don Schuerman: Yeah. I think there’s still a lot of open challenges in data management. What’s interesting to me is that data management skills, you know, about 62 percent of our respondents said it was currently a hugely important skill. That dropped to 33 percent in two years. So I don’t know if that means that IT leaders think that they’re gonna have their data management skills solved by then or if they think this problem space is gonna change.

What I think is gonna be a very true point that we need to be able to handle is I think our data is going to increasingly be more and more distributed. It’s gonna be distributed inside of different cloud environments. In some cases, if I’m a global organization, data jurisdiction laws are gonna require me to keep data inside of certain physical boundaries. So I’m not able to centralize certain categories of my data, if I want to be compliant with GDPR and various other data restrictions.

So I think organizations are gonna have to learn how to do data management in a distributed way. That’s one of the reasons why I think some of the core capabilities like automation and process and workflow are becoming really vital again, becoming a real part of the discussion. Because you know what keeps my data in good shape? It’s good processes.

We work with Siemens. They have 45,000 users, who use Pega as the processing across about 50 different ERP systems, to ensure that when they make a change to a supplier, that supplier change is reflected in all the different distributed systems they have, and it’s consistent and it’s up to date. That kind of process-driven thinking around how do I keep my consistent, even when it’s vastly distributed across my organization, I think is gonna be continually important.

Mike Vizard: Do you think that the other digital CXOs are gonna trust the data? One of the issues that’s been around for a long time is a lot of times those guys know that the data itself, the quality is a little shaky, and then they get reluctant to make business decisions based on the analytics of data that they don’t have a lot of confidence in on the quality side. So are we gonna get better at ensuring the quality of that data, so that we can make more analytics-driven decisions with confidence?

Don Schuerman: I think so. I think part of that also starts with looking at the problem from the inverse, which is: what are the decisions we need to be able to make? Then what’s the data that we need to have high accuracy in to be able to make those decisions?

So, for example, we work with lots of clients to automate customer-facing decisioning, figuring out what’s the next best action. What’s the right conversation to have with a customer, with a client?

The way that we actually drive that is rather than try to solve a big data problem to start, because every organization struggles with the quality of some of their customer data, we start with what’s the decision you’re trying to make. You’re trying to figure out what’s the churn risk of a customer. You’re trying to figure out what’s the next best offer to put in front of the customer. You’re trying to figure out potential lifetime value of the customer.

Well, now I can work back from that to say: what are the key fields? What are the key pieces of information I need to be able to drive that decision? And I can start beginning my data cleanup with the stuff that’s gonna be most impactful to the business.

So I always encourage organizations that trying to tackle data in a vacuum is like trying to go into a massive warehouse and organize the whole thing all at once. Instead, the idea is: what is the answer you’re trying to find? And how do I get the data that I need to drive the outcome I want? Then I’m going to continue and expand as I drive through more outcomes.

We’ve seen that approach be really effective, not only to deliver real value pretty quickly, but also to help organizations begin that process of scrubbing and improving their data.

Mike Vizard: As we kind of go down that path, do you think that a lot of the siloes that exit may start to collapse? We’ve always had these different siloes around marketing and sales and customer service. As we go along and you start thinking about digital processes and you do order to cash or something like that, they cross all those different boundaries. So do we need to take a giant step back and look at how the business itself is organized?

Don Schuerman: Yeah. I think a lot of the job of a good IT leader is to be a little bit of a silo smasher in the business. I think the combination of – whether it’s a CIO, a chief digital officer, a chief experience officer, all of those roles need to be about looking across siloes.

I think it’s important to understand that I also think there’s some siloes that IT has created in the business that we need to deal with. I think we’ve created in the past, historically, a lot of channel siloes, where we’ve built Web apps, and then we’ve built mobile apps, and then we’ve built contact center apps, and we’ve embedded unique versions of business logic into each of those applications.

So as a customer, I find myself constantly restarting a process. Every time I move from the website to call somebody in the contact center, I have to restart. What was I doing? Where are you? I’d start the whole process all over again.

That’s also a series of siloes that IT has creating, and I’m seeing a lot of IT leaders begin to think about, “Okay. How do I centralize some of that logic? How do I create a common process layer? How do I create a common decisioning engine that works across all those channels, so I don’t have those unnatural siloes in my business?”

I think those are the kinds of places where IT can really set the standard and set the path for how do I break through what the traditional siloes have been, and really focus instead on: what’s the outcome my customer is trying to get to? What’s the outcome my employee is trying to get to? And how do I make the path to that outcome as fast and easy and efficient as possible?

Mike Vizard: We hear a lot about all things related to artificial intelligence these days. Is this just hype or do you think that there’s a there and people should start planning around it? If so, to what degree?

Don Schuerman: I definitely think that there’s a there. I think we sometimes do artificial intelligence a disservice when we describe it as some big monolithic AI thing that’s just gonna drop in, frankly, like a cartoon character and make everything smarter. I think AI is actually really a set of very distinct technologies that have very distinct use cases.

So we have natural language processing that has real power in terms of being able to support chat bots and automated communication. We now can do voice recognition. So we can help an agent who is on the phone by prefilling a form, because we’re recognizing the voice that’s coming in on the phone line and actually helping them do that.

That’s a very different set of AI technology than say a decisioning technology that I might use to make a next best action, or predict the likelihood of a customer to churn and make a recommendation. And the types of data that I need to feed those, the way in which I train the models, the level of transparency and explainability that I need to have is different across all of those.

So I think the important thing for organizations to do is to not think of AI as one massive machine, but think of it as a series of tools that each have very specific purposes, right, that I ultimately need to align against what’s the outcome I’m trying to drive. Am I trying to add efficiency to a business process? Am I trying to make my customer service agent more effective? Am I trying to optimize my relationship with every customer, so I can retain them and grow my share of wallet?

In each one of those use cases, an AI technology can actually add value, but I have to be thinking about the use case and I have to be thinking about the specific tool in my AI toolbox that can make that happen.

Mike Vizard: I think one of the issues that people are struggling with right now is what process to lean on a packaged app for, what to write as a low-code tool, and then what to use traditional procedural code to go drive a process on. Have you seen any patterns on that lately? Is there a way to think about that?

Don Schuerman: Yeah. One of the ways in which I’ve encouraged and seen other leaders think about this is, first and foremost, you need to start with the question of whether or not that process needs to be differentiated for your business. If I’m a large bank, the way that I process internal IT service requests probably isn’t how I differentiate my business from other banks. I want to do it efficiently. I want to do it well. But there’s no real commercial benefit for me to do IT service ticketing any different than any other bank might. I might need to plug into some _____ systems, et cetera.

But if I think about how I support a client who applies for a loan, well now all of a sudden that’s a process that differentiates my experience. We know that a lot of now what drives customer buying and customer decision making is not just the product itself, but the overall experience associated with the product.

So if I’m thinking about a process like that, like how do my clients apply and onboard for new services like a loan, how do I service my customers? How do I manage exceptions when something goes wrong in my customer lifecycle? How do I handle the internal operations that directly impact the products and services that I’m delivering to my customers?

Those processes, to me, are the ones are strategic to my business. They differentiate my business. That’s where I want to have something that gives me the flexibility to both integrate it into my existing system, but also define a process that reflects my business’ best practices and my differentiated experience that I want to offer to my customer. So that, to me, becomes the first important step.

Then what I also think about is, from a code versus low-code perspective, what’s the stuff where you need flexibility to change, where you need to be able to continuously test it and review it, and maybe introduce variations by different areas of the business? That’s where low-code is really good.

If what I want to be able to do is exploit the latest and greatest technology to build something really cool, that’s where direct coding sometimes is pretty useful. What I’ve found more often than not is I’m increasingly using code for things like digital channels, building a website, developing a cool mobile app that’s got all the bells and whistles. And I’m gonna use my low-code engine behind the scenes to maybe manage some of the process steps that happen inside those app, and then use APIs to hook my low-code process that I can change, move, and configure into the frontends that I may have coded in the latest and greatest React or Angular tools that my developers want to use.

Mike Vizard: Do you think that businesspeople understand these conversations better? It almost seems to me that the current generation of business leaders is not as intimidated by IT as the previous generation, and they’re more than capable of having these conversations. Maybe that’s part of the key to the advances that we’re seeing.

Don Schuerman: I think so. Look, I have two kids who have grown up playing Minecraft, and not just playing it, but building their own worlds in Minecraft. So using a computer to build something that you then want to go use is not foreign. And I think it’s gonna be less and less foreign as more and more generations move into the business leadership side.

I also think that the flip side is also happening on IT. I think IT leaders are realizing that their strength and their ability to support the business is not just through their bits and bytes, understanding and keeping the lights on of the technology, but their ability to apply that technology to the specific needs and strategies of the business’ understanding.

So I’m seeing both businesspeople who are more comfortable on the IT side, but also IT people who are a little bit more comfortable getting involved in pretty strategic discussions about where the business is going and what products are they developing, and how are go-to-market strategies changing. And that meeting in the middle is where innovation happens.

Mike Vizard: All right. Let me ask you this. Are you more optimistic now or pessimistic about the future of IT than you might have been before the whole COVID pandemic came along?

Don Schuerman: I’m definitely more optimistic. As painful as the last 18 to 24 months have been, we’ve actually probably put ourselves through five to ten years of transformation in a two-year period. I think there’s a huge opportunity, and I’m seeing it, to come out stronger, to come out more comfortable with agile approaches, to come out more comfortable with distributed work, to come out more comfortable with direct and personalized digital engagement with customers and employees.                               

All those things that we’ve bee trying to transform kind of got forced on us by COVID. I think that puts us in a place where we are now ahead, potentially, of where we could have been. The question is: will as IT leaders take advantage of that over the years to come?

Mike Vizard: All right. It may not have gone exactly as planned, but it’s full speed ahead. Don, thanks for being on the show.

Don Schuerman: No problem.

Mike Vizard: All right. Guys, thank you for spending some time with us. See you next time.

Don Schuerman: All right.

 

Show Notes