Have you ever wondered how your CIO views topics like the need for software testing and digital transformation? At Accelerate 2017 we held our first-ever CIO panel interview, discussing questions like: How urgent is the business need for digital transformation? How does the board receive information like this? What is IT’s new role in the digital economy? The session was so popular, we are gathering a new set of CIOs, including Andy Walter (Procter and Gamble) and Jennifer Sepull (USAA), for the upcoming Tricentis Accelerate San Francisco. Check out the video and transcript below for a sneak peek of what’s to come.
Here’s the full transcript
Emmet Keefe: We actually had the global head of digital at BBVA speak at one of our events over the weekend, and he shared with us a very important insight at BBVA – which is that whenever they have a failure, they double down. That’s their philosophy. And so, Franz, to your point about Formula One, my original dream was to “start a Formula One team”, which I did in America. We started a company, a team in 2008 to go racing as an American Formula One team. Ultimately, we failed, and so I doubled down. My new dream is to win the championship, so, we’ll see what happens. What’s funny about my is dream is that when I used to come to Europe and share it, people would burst out laughing, which I really enjoyed.
So, this session is really a follow-up on the morning session from Todd Pierce, which I thought was absolutely extraordinary, and he really gave us three messages. One is that digital transformation is a board and CEO-down transformation that’s happening within every one of the Global 2000 companies, without question. Every board member is truly scared about digital transformation, so that was one key point.
Another one is that agile, DevOps, cloud, and software delivery transformation is on the radar of every CIO globally now. And the third point, which I was incredibly inspired by, is the role that transforming testing can play in unlocking this accelerated software delivery, and ultimately digital. So, we’ve got four leaders from very different types of businesses. I’m going to ask them about their digital transformation, so you can understand how different leaders and different businesses think about digital. I’m also going to ask them each to talk a little bit about their agile DevOps cloud transformation, so you can see some differences there, as well.
Before I do that, I’m just going to talk a little bit about our private equity firm and the program that I run called Inside Ignite. So, personally what I do, is I run a program called Ignite, which is about accelerating digital transformation. When I meet with a CIO, I typically ask them a question, which is what are the four biggest problems that you have to solve in order to unlock your digital transformation? I’m having those conversations all around the world, and I haven’t seen a single company or a single global CIO that can’t answer right away. This is a top of mind issue for every global company.
So, if I had a room full of CIO’s and if I asked the question, how many of you are going to Silicon Valley this year, every single hand would go up in the room. And the reason why they’re going to Silicon Valley is they want to find technology that’s going to help unlock and accelerate their digital transformation. What a lot of CIO’s don’t know is that actually in the Valley, those earlier stage venture capital firms are placing bets on futuristic ideas. So, they’re betting will the market want to solve this problem three years down the road, or five years down the road? That’s what you’re going to see in Silicon Valley, which is important. But actually to solve things today, you need technologies that are relevant to today’s problems, and that’s really what Inside Venture Partners and our Ignite program is all about.
So, just a bit about the firm. We’re the world leading private equity firm in the area of the market that they call software growth. Most of our portfolio companies are between 20 and 100 million in revenue/turnover when we invest. The second part of our vision is only software, so we never invest in hardware or services. The third part is to find businesses that are growing exponentially fast already. We look for businesses where the revenue has already gone from two and a half million to five million, to ten million, to 20 million, and when we find one of those, if we think it’s going to go from 20 to 40 to 80, then we make a growth acceleration investment. As you heard this morning, we invested 165 million in Tricentis. We’re extremely bullish and excited about Tricentis. We agree with Sandeep that there is a very large business that can be built here in this new, continuous testing world.
So as a firm, we currently have 13 billion under management, and each year we go through a fascinating process. Currently, we’re tracking about 100,000 software companies globally, so whenever somebody gets Series A funding or Angel Funding, they go into our database, and we start to track them from the very beginning. We have a team of 40 people that call almost 20,000 CEO’s per year. So, that’s how we found Sandeep actually – one of young analysts was calling, and I think Sandeep was ignoring them for some time. And then finally the analyst said, “well, can I come to your Accelerate conference?”, and that’s really what unlocked the conversation.
Out of those 15,000 conversations, we only find 2500 that we want to meet with. And then in the very end, we consider 250 investments, and we only deploy two billion in about 25 companies each year. So, it’s an incredible needle in the haystack exercise, and I wanted to show you this just to emphasize how special Tricentis really is. This is one of the fastest growing software companies on Earth, and we found them as one of 25 out of a pool of about 100,000 companies globally.
I want to throw up a couple other portfolios that you may know. We have 150 currently in the Portfolio Docker, I’m sure you’re aware of, and I’m sure your organization is leveraging micro services and containers and that whole movement. We made that investment about two and a half years ago, just as the business started to accelerate. We put 100 million in there to help them move faster. WalkMe is a very interesting business that provides self driving software, so it eliminates the need for training. So, when you’re done and the application goes into production, WalkMe is actually a Google Maps type application that can just show the user how to use it without actually having to put them through any type of training. Each one of these portfolios is fascinating, and there are many, many more in the portfolio.
When I hear from a CIO what their four issues are, I match analysts against those, and portfolios against those, and try and help accelerate solving those problems, and therefore accelerating the digital transformation.
So, Todd challenged you this morning to be brave, and to engage your CIO, and this will be a way that you can become more relevant on the digital agenda in the CIO’s office. There’s three ways that we engage with large global companies: one is that we create curated briefings on topics of the CIO’s choice. So, if they say AI is top of the radar right now, we’ll bring all of our analysts and all of our portfolios and see if we can accelerate the knowledge around AI. If they say DevOps is a topic, we can address that. Whatever the topic is, we can bring thought leadership and technology and try to accelerate the solution. Franz mentioned we produce thought leadership events around the world. We were in Tuscany this past weekend with 20 CIO’s having a very interesting discussion about IOT, about digital transformation. So we do these all around the world, and you can invite your CIO to come to one of these events. And the last thing we do is invite CIO’s to sit on the board of our portfolio and help them accelerate. So, actually Rob and Vittorio and Irwin are all board members at Tricentis, along with Todd, to help think about how to accelerate the business faster.
So, with that, we’re going to transition over to the panel, and first I just want to go through … if you guys just quickly your career 30 seconds prior to Etihad, and then what you’re currently doing at Etihad.
Rob Webb: I’m Rob Webb, I’m the CIO of Etihad Aviation Group, and prior to that, I was the CIO of Hilton Hotels, the global hotel company, and I worked with General Electric and Equifax in the early parts of my career.
Emmet Keeffe: Great. Vittorio?
Vittorio Cretella: I’ve been 26 years with Mars where I was the global CIO, and about a month ago, I retired, and I became an independent advisor.
Emmet Keeffe: Very good. Andreas?
Andreas Kranabitl: I’m responsible for IT at the SPAR Austrian Group. I’m in this company over 55 years, and my passion is Formula One. So if you need somebody to do something for you-
Emmet Keeffe: Okay, the panel discussion is done.
Erwin Logt: I guess after we meet you, all our passions are Formula One. Good afternoon my name is Erwin Logt. I worked for Proctor and Gamble for about 18 years, the last couple of years in the US. Since 2013 I’ve been the CIO of FrieslandCampina, one of the leading dairy companies in the world. For the last two years, I have the pleasure of also being the Chief Digital Officer.
Emmet Keeffe: Fantastic. We’ve got a great group of panel members here, so I want to just investigate first how they’re thinking about digital transformation. Rob, we’ll start with you, if you could just talk-
Rob Webb: Well, I’m just going to kick this off by saying you are all very fortunate to be in this room because the opportunity that we all have is just enormous. You’ve got one of the world’s top venture capital firms that’s mid stage, so all of the screening of the companies has already been done, and they’ve invested in a fantastic company, Tricentis, right here in Vienna, but also in Silicon Valley. And, the sweet spot that Tricentis is in with respect to automated testing is something that is in incredible demand around the world. So it’s a unique culmination of events because as a CIO, what I’m doing across Etihad and our equity partner airlines is trying to accelerate innovation, and that really means everything we’re doing with online and mobile, and all the rapid application and agile development we need to do is the most differentiating part of our application portfolio. And you’re becoming aware of, getting trained in, using, and buying software that will make your CIO’s survival rate higher. They’ll make your company more profitable, safer, and grow faster. And as a CEO, they love that.
Can you make my testing faster and get my new apps out there so I can be more competitive? Can you do that in a way that makes testing more automated and safer, and can you do that while you’re lowering costs? This is something that is very, very unique, and I think we all have a wonderful opportunity to be part of this revolution. As Todd really highlighted this morning, it takes each of us to commit to make this happen, and we can change the world.
Emmet Keeffe: So I had the privilege last summer to visit the innovation center in Abu Dhabi that Etihad built. I’m just curious – that was a massive investment. Can you talk about what drove the board to make that investment, and really just how the company is thinking about digital transformation?
Rob Webb: Well, you know, we’re the national carrier of the United Arab Emirates, and the country’s a very, very wealthy country, but they have these amazing aspirations. They want to build the very tallest buildings and the best education systems, the best healthcare systems, and they also want the world’s best airline. So that means new planes from Airbus and Boeing, but also it’s more than just the physical aircraft – it’s the service on board and the digital guest experience that goes with that service. That includes the online applications, the loyalty program, the mobile apps, the inflight entertainment. So, you’ve heard the expression from Marc Andreessen and Bob Horowitz that software is eating the world. What Tricentis allows you and your companies to do, is accelerate how software is digitizing your businesses. So, you’re just, as I said, right at the sweet spot of an enormous opportunity.
Emmet Keeffe: Fantastic. When Sandeep and I first started recruiting CIO’s, I have to say actually, testing was not sort of the hottest topic in the world. So, it was fascinating when Sandeep and I started reaching out to some of the world’s most famous CIO’s. I think we reached out to 60 of them, thinking that maybe 20 would want to join this board. We actually had a 60 for 60 hit rate. Every single CIO responded and said, “I want to have a conversation about that and I want to consider joining the board of that company”, which I think shows just how relevant testing is for the digital transformation.
So, Vittorio, I know you’ve come from a very different type of business. If you could talk about how you think about digital transformation?
Vittorio Cretella: Sure, as a CPG-CIO, I think of digital transformation from the top line to the bottom line, and everybody gets the top line and why the front end, and the relationship with the customer, benefits from digitalization. We had a clear example where digitization and the development of digital solutions using DevOps make you closer to the consumer, creating value with digital factories that are a blend of the physical product and the data.
What many don’t get is that on top of digitalizing – that shiny, visible part of the iceberg – you need to digitize the whole of the company operations, and that includes your data asset and your enterprise system, your system of records, and your ERP. There are three fundamental reasons why you want to do that. And the first one is that data becomes equity, which historically is not really part of the successful model for a CPG. But now, it’s a big differentiator, and if you don’t get your internal data in order, let alone try to absorb and extract inside from a multitude of external data with the internet of things, with the closeness to consumers and digitization, you actually need to.
So that’s the first reason. The second reason is speed, and we have several examples. When you have a merger or an acquisition, what stands in the way is the integration and the regression testing of ERP, especially when you talk about a global footprint. So, products like Tricentis Tosca would massively reduce the time to market; the lead time to make those changes happen.
And the third one, last but not least, is efficiency – because for any CIO who needs to digitize, part of the funding for that initiative comes from rationalizing and making your IT and your enterprise system more agile. And we have a typical example in that the next frontier to making your enterprise system more efficient is to automate. Testing is at least, as I said this morning, 40% of that effort. So, we have an automation expert center, that is looking at all the transversal processes in operations, as well as the development expert center adopting DevOps for ERP, and both of them using tools like Tricentis Tosca, or looking at a tool like Tosca to speed up and deliver that part of efficiency. So, again, everybody looks at the top line, and clearly, there is a massive differentiation with digitization on the way you craft the consumer value proposition. But we shouldn’t forget the system of records and the massive benefit of digitalizing your operations.
Emmet Keeffe: That’s great. Thank you, Vittorio. We spent the last day and a half here in Vienna with a room full of 15 CIO’s. These are all members of our Growth Advisory Board. The question we were asking is, if you’re calling on a global CIO at a business of this scale, how do you explain Tricentis in such a way that the CIO will actually sponsor that transformation? I know for many of you, if you have the right CIO level sponsorship, it would accelerate everything that you were trying to do with continuous testing and Tricentis. And what’s interesting is that a lot of times, when you reach out to a CIO on continuous testing, they’ll ping their testing organization or their vendor partner and ask, “are we doing test automation?”, and the answer comes back up, yes, we are. What they don’t say is we’re doing UI level automation, and we’re not really doing automation of the core. So this is actually one of the things that came out of the last couple of days that’s really a fundamental value proposition of Tricentis: end-to-end testing across the entire net new and legacy infrastructure.
Vittorio Cretella: I’d like to add something. I do remember the head of our development factory telling me we don’t automate testing because we don’t have the money to pay for scripting. And you know, if we’re script-less, that problem goes away.
Emmet Keeffe: Perfect. That’s great. So Andreas, you obviously come from a more consumer oriented business. If you could maybe talk about when that pressure really started building on the digital transformation, and where you are in the journey with digital?
Andreas Kranabitl: I think we’ve been in a digital tsunami over the last three years, so the affect on the retail business is very strong. We are working hard to optimize the digital processes using digital systems by I do not know how many thousand products per months. One big part of this digital story is really to optimize the existing processes to be much faster.
The second area of course is new business models, which are really possible with digital. So, coming closer to the consumer – here in Austria a store’s opening hours are limited, so I have to deal with how we can really meet the customer all the time and on the weekdays.
And the third focus area is the digital customer experience, so we are talking about of course mobile apps and more. This means that the digital challenge is around all the companies, so we’re not talking only about online shopping, for example – we are talking through the whole company. The last few years we have been working hard on that. But it is much easier to digitize the existing stuff.
In the past there was the cushion in between the IT and the consumer. But, going digital with this customer experience, using a mobile application, we are dealing directly with IT and dealing directly with the consumer, which places IT in a very strategic position in the company. That position ranges from the supporting role to a strategic one, because we are talking to the consumer and is it challenging to understand how they are thinking. We have built new disciplines inside the IT organization, so we have to really understand how the user is reacting and how to really achieve this customer experience.
As we come into the digital experience with IT projects, we need a permanent department. Deploying functionality day by day, or hour by hour, is a big challenge for the organization. If you would have asked me one year ago, I would have said that testing is boring. Now, testing is strategic and I’m very happy that my colleagues started to implement Tricentis in all these testing processes years ago in the legacy world.
So now, we are really ready to service the new world.
Emmet Keeffe: That’s great. Well, that’s exciting for everyone in the room and confirms exactly what Todd was saying this morning. We have one more quick question for you: this weekend, we had two chief digital officers talk at this event in Tuscany. One was from BBVA, and the other was from Schindler. Very, very different businesses, and one of the things that struck me was hearing BBVA’s strategy versus Schindler’s strategy. I realized that Schindler is a hardware company and BBVA is really a software company, and therefore they had really different digital strategies, and I’m curious. Are you beginning to think of your self as a software company now, and do you think retailers are going to ultimately be heading in that direction?
Andreas Kranabitl: I think this is similar to our situation. Our board and our owners are really thinking in the future. But, I think we have to convince the more senior guys. Our board leader is always saying, Mr. Kranabitl, you must be aware we are not going to be an IT department. We are a retailer. But, I think the understanding now is more and more that IT, as I said before, is moving in a very strategic position. More and more, I think we’re also moving into a position to really to lead this transformation, so inside SPAR, we are talking about digital and innovation.
Emmet Keeffe: That’s great.
Andreas Kranabitl: I think we’re really now a business driver, for example, organizing and doing innovation workshops with the business to explain to them where the future is and what technology can really do into the business model. So, this is our position – I am willing to trying this. So, this is really a cool situation because I think that they’re really starting to see the changes and that’s really the point.
Emmet Keeffe: Okay, great. Well, another really interesting session that we had this weekend was called IT In the Boardroom, and we had the CIO of Rolls Royce, who’s just finishing up a big transformation at Rolls Royce. And two things he left us from his keynote: he said, don’t ever underestimate the lack of knowledge that a board director has about technology, and don’t ever underestimate their uncomfortableness to share that with you. So, this actually a big challenge that CIO’s have: they’ve got pressure from the board level regarding a digital transformation, but the board members don’t really know what it is, and they’re also afraid to admit that.
Erwin, same thing, I’d like to hear about your business. I know you’re just are taking this Chief Digital Officer role, as well. If you could just talk about what caused the business to head in that direction and how are you thinking about the digital strategy?
Erwin Logt: First of all, I heard a few of my partner panel members say testing is boring. I don’t think it’s boring. I think it’s actually pretty cool. I have to admit, before I became a member of the advisory board of Tricentis, I didn’t know that much about testing. And, I totally underutilized and underestimated it. I should say, the amount of time we spent on it, and the opportunity to really transform testing – how you can drive some speed and quality on the side… but, I’ll come to that in a second.
So FrieslandCampina, for those of you who don’t know it, is a big dairy player, multinational, about 12 or 13 billion. We sell milk, yogurt, that kind of stuff. For about 80%, we are a fast mover, consumer goods company. So, it’s very similar to Mars, to a certain extent. And about 20 to 30% is B to B, where we take ingredients out of dairy and we sell it, for example, to pharmaceutical businesses. Now, about three years ago, with the executive board, we said, “okay, digital; the world is changing whether we like it or not. We have to change, we have to adapt”. To a certain extent, we looked at it from an opportunity point of view. To a certain extent, we looked at it from a threat point of view. The recent examples, for example, like Blockchain, is an interesting one that is used to track or to trace the ingredients of food. And, we have to decide whether we want to play or not play.\
Anyway, we declared a strategy. We called it Embrace Digital, and to be very honest, it probably, like many other companies, it took us about a year to figure out what we really meant with that, and where we really wanted to move the needle. What were the priorities and how do we measure success, etc.?
Right now, we have a digital strategy, if you’d like, and we are prioritizing three areas: one is actually the commercial domain, so we’re looking at digitized marketing, but if you’d like, we want to set up our marketeers successfully in the new, digital world, with all kinds of tools and technologies. The second one is, of course, that we want to set up a whole new ecommerce channel. And, to a certain extent, we want to drive a new business model, which for us is direct to consumer sales. So, we have a few products where the profit margins allow us to sell it directly to consumers with all kinds of interesting challenges, etc.
The second priority is analytics. Combined, obviously, with elevating the first priority, there’s more and more data becoming available. There’s more demand for real time insights, whether it’s consumer analytics, consumer behavior, or just business performance. And, the third priority is what we call the digital workplace or the employee. We truly believe that one the one hand, we are investing in customer experience and transforming that, but we also believe in transforming the pre-experience, and therefore elevating the performance of the company.
Now, last but not least, of course, like all of us, we are challenged to a higher demand for speed in terms of technologies, and bringing value to market. Of course, it always needs to be cheaper in our business, and we cannot drop in quality. As a matter of fact, quality needs to increase, so it’s an end-to-end-to-end game. And then like I said, things like Agile and DevOps, are coming up. I wouldn’t say we are a front runner, but we are catching up quite quickly, and with that, obviously, we are now very much aware of the pain points around testing, especially around the lack of speed, if you’d like, in those areas, both on the operational backbone, as well as on the new fancy stuff. The apps and the websites, are very much forward also. We are trying to transform that part of the business.
Emmet Keeffe: Thank you very much. Franz mentioned prior to entering the private equity world, in the year 2000, I spent about a year interviewing analysts, project managers, CIO’s, heads of development, and I was asking the question, “if you’re trying to make software delivery go lightning fast, what gets in the way of that speed?” And the answer I kept hearing over and over again was the up front requirements phase, which is what bogs everything down when you’re trying to get software down at speed. So, we invented the market for software simulation, and what I spent 17 years working on was trying to create a real-time, collaborative, proto typing platform for product managers and business analysts, so they could actually collaborate on design solutions with the business. Unfortunately, it was an idea that was about 30 years ahead of its time. But actually, the market is catching up. Etihad, they’re spending time and money on design thinking – what is the latest around how you rapidly visualize new, innovative ideas? I think, an interesting question might be, if your organization is involved in this sort of early, up front prototyping, how can you get engaged from a testing standpoint earlier, and then help make sure they do testing the right way as they head into the development process?
So, I’ve asked Rob just to talk a little bit about design thinking. What are you doing?
Rob Webb: Well, we’re running short on time, but I’d kind of summarize it by saying that these technology and process changes move very, very quickly. And, for everyone in the room, there’s a huge opportunity to be a change agent, to inform your CIO, inform your head of development about the new Agile design thinking, DevOps world, and to be a champion for the changed behavior. And through that process, in addition to inviting them to connect with Emmet’s Venture Capital firm, which I really think they’d welcome that opportunity, you also have the opportunity to help make them heroes, and to make yourself a hero because you’re going to increase speed, reduce risk, and improve the quality and cost structure of that testing, And there’s many ways to do that. But, it means taking a bit of risk and being a change agent inside your technology organization.
I would just leave it at that. You can read up on design thinking, it’s a customer first approach to solving problems in agile, bite sized ways, and it’s working for us. But, I think everyone in the room has a huge opportunity.
Emmet Keeffe: That’s great. Final question and then we’ll wrap it up. We’ve got to get some of these gentlemen on an airplane. Andreas, I want to ask you when did this testing topic hit your radar? How did it hit your radar? I’m just curious. Within your organization, how did they bring it to you?
Andreas Kranabitl: It did it really when we started to go online, enabling online shopping, and learned that this is not a project which starts and ends. After the project is finished, the next project is starting. So, we said that this was a permanent process, and we made the requirements never ending, and I think the main problem was speed. I really couldn’t understand it because I’d been trying to stay on the business side, and if there are coming requirements, I would have to say yes. And really that was the state of the art online customer requirement: we need this functionality, that functionality, and we deploy functionality on daily basis. The message or the topic of the year is permanent deployment in our companies, and we are working hard on that, and now this was really the point because I really have to clarify, that testing is boring.
But now I really understand how strategic testing is and how important it is this in this environment, because before in this classical waterfall project, it was something yeah at the end of the project. It was done by the business people or by some IT people, which was not really of interest. But, now I think testing is really strategic because first of all, you have to save money, you have to save time, and you have to save the time on the testing environment. And I think the sooner you start to do testing, I think it’s more efficient.
I think we have to mention that if you ask me what is the most important focus in the digital transformation, it’s people. So, and I think we can not use people for testing. There is much higher work to do. We need future oriented staff, and to not make them suffer by doing manual or needless testing. I think this is very important from my point of view.
Emmet Keeffe: That’s great. Well just in summary, over the last day and a half, there’s really three or four things we heard from this room full of CIO’s. One is that they are under tremendous, tremendous pressure from the board to accelerate this digital transformation. The second thing we heard from them is that they’re looking for opportunities to automate within the IT budget. Typically, 80% of the budget is spent to sort of run the business, and only 20% is on the innovations, so they’re looking for ways to shift that money over. And in our investment portfolio, we’re seeing more and more businesses that are growing fast that have automated something. In this case, it’s testing. We just invested in one that’s automating incident diagnosis and incident resolution. Many of our investments are somehow in the automation space. And the reason why is that CIO’s are looking for budget that they can release, and redeploy towards digital. The other thing we heard from the CIO’s is that they desperately want speed. I mean, they want 30 day type speed. Not three month, six month, 12 months type speed. And, the last thing they want is everything done at a lower cost: more efficiency.
So, I couldn’t agree more this morning with Todd. I think you’re in an absolutely extraordinary position to have a really fun ten years here as we go through this transformation. And I also think from a career development standpoint, if you are brave enough to elevate your story up into the office of the CIO, I think your career will accelerate as well.
So, with that, I want to thank Todd from this morning and our four panel members here. Thank you, everybody.