CIO seeks 'disruptive opportunities'

Michael Nilles believes Schindler Group's IoT-focused digital transformation will take the elevator maker to new heights.

Michael Nilles, CIO, Schindler Group
Schindler Group

For nearly 150 years, Schindler Group has been moving people. The Lucerne, Switzerland-based company makes, supplies and services elevators, escalators and moving walkways. As it moves toward the future, Schindler is deploying smart equipment capable of sharing information with back-end systems and, among other things, sending alerts about maintenance needs to service personnel.

CIO Michael Nilles has been instrumental in spearheading efforts to develop smarter, more advanced systems and enable a more mobile and connected workforce. In addition to leading IT operations, he's also CEO of a new unit called Schindler Digital Business, which tackles innovative projects with emerging technologies to further the company's digital transformation. His work earned him the 2015 MIT Sloan CIO Leadership Award, which recognizes CIOs who lead their organizations to deliver business value and use IT in innovative ways.

Why do you have two titles? Being CEO of the digital unit is really reflecting the next evolutionary step in our digitalization. It's our innovation unit within our corporation, and it helps us have a much more holistic view and to fast-forward our digitalization effort.

"Business transformation" is a popular buzz phrase these days. How do you define it? What is unique to business transformation is that you're doing some game-changing adaptation to your business model to stay at the forefront of your industry. That's how I define it. The industry could be challenged by competitors who weren't even in the business before. Business transformation in our traditional industry happened in three waves. The first was globalization; companies used to be extremely decentralized, everything was more by country. Then the next big wave was operational excellence, where we optimized our internal business processes to drive major optimization. And now we're in this phase we call leading-edge digital business, which is bringing substantial changes to the business model.

Is there a metric to measure transformation? It's really looking toward disruptive opportunities. With digital transformation, it's much more focused on top-line growth. You want to dig into new market opportunities. Now we're looking into new fields of business, and that's what requires the entrepreneurial long-term visioning approach.

You talk about building a global business process platform and IT rationalization. What did these bring to your company? This again comes back to the three phases. The first one was IT rationalization, where you standardize IT infrastructure, retire legacy systems, harmonize your IT architecture to lead to high efficiency.

The next big phase was the global business process platform where you build up and harmonize your processes and standardize them on a global scale. This helps you establish a global supply chain and manufacturing network in a standard and coordinated fashion. It's helping you to gain operational excellence and helping your organization to standardize. But at the end of the day, it's something that our competitors can replicate. It's just a matter of time. So you can lose your competitive advantage. So we thought about that and asked, "What is game-changing, and how can we make a sustained advantage that can't be replicated?" Now we want to dig into the leading digital business area where we can obtain a sustained competitive advantage.

How did you obtain that? We made our products smart with the Internet of Things. We equipped our service force with a digital tool case based on iPhones and iPads. But they couldn't work on this digital platform if we hadn't invested in the global business process platform first.

"Digitalization" is another term thrown around a lot. How do you define it? A lot of people say it's just a new buzzword, and a lot of ideas were there before, like machine-to-machine communication. But it has reached a high maturity stage not just in terms of technology but in acceptance on the business side. It's very high. People are ready for this disruptive innovation. So that's why it's not a technology transformation; it has become the business transformation.

Digital is certainly game-changing. It's allowing for new platforms, you're creating new ecosystems, and therefore allowing new opportunities. We're not talking here about technology, it's more about a new transformative approach. In this regard, digital is not just replacing the term information technology; it's making use of information technology, but there are more elements to it.

In the past, we were looking to individual technologies and how they could enable certain business processes. Digital is not really focusing on internal processes and cost optimization;digital focuses more on the market, customers and top-line growth. It's a much more holistic and comprehensive approach to doing business.

You also serve on a board of directors for a medical devices company. How has that helped you in your CIO role? It's helping quite a lot. In the role on the board of directors, you have a strategic part. You're working on disruptive business models, services and products. And it has an oversight aspect where you're looking at large transformation projects. And there's a defense part, when it comes to cybersecurity. It's an ideal mix. As CIO it's helping you because you understand much better what are strategic business decisions: How would you extend your product portfolio? How do you enter into new markets? It's helping you get a much more comprehensive business view.

How does Internet of Things fit into your organization? For Schindler and our industry, it's playing a fundamental role, because our products are now made smart. If you think about our lifts and escalators, you can measure their health. They are connected, and there are many data points — speed, temperature, door leveling — and you can make use of that data. You make use of it through a big analytics engine.

Michael Nilles, CIO, Schindler Group Schindler Group

To be a leader in business today, “you have to be a risk-taker and lead disruptive change,” says Schindler CIO Michael Nilles.

You can predict, for instance, when an elevator would need service before a customer knows about it. And we use it in a closed-loop service process — we call it a digital service platform. So the elevator tells you about its health, and our service unit and customers know about it. If you're a manager in a department store chain, you would not know immediately if your escalator was broken, and when you finally noticed it, you would call for service.

Now the customer has an app and can see the status, and the service technician knows right away and can keep the customer informed. For us, this is a real game-changing technology. It's changing from a reactive to a proactive service model.

What are the top challenges for IT in supporting this? It's not just about the technology. It's about thinking through the processes with the different business partners. This is where unity of effort plays a part, because it's working with people in the industry and outside the industry to enable this completely new service model. There are huge technology changes involved as well, but it's really about how we make a new customer experience. That's the focus. That's why we just don't look at the Internet of Things, but we holistically looked at the customer experience and came to the conclusion that the Internet of Things was a big part of it.

What do you see as the top qualities needed to be a leader in business today? It's super essential to build relationships and drive change. You have to be a risk-taker and lead disruptive change. It's very important to inspire people, and to engage them to take risks. That's not so different from being a good CIO in the past, but it's more important now.

This story, "CIO seeks 'disruptive opportunities'" was originally published by Computerworld.

Copyright © 2015 IDG Communications, Inc.

The 10 most powerful companies in enterprise networking 2022