By: Daisy Hernandez, SVP of Strategy and Operations at Zuora
Today, CIOs have become much more strategic in serving as the backbone of customer and employee success. Launching and scaling a reliable IT infrastructure is critical to embodying the resilience and agility needed to support long-term growth and a competitive advantage in any economic climate.
That’s why I’m excited to announce the newest member of our executive team, Paul Heard, who will serve as Zuora’s Chief Information Officer.
Paul most recently served as Digital Transformation Leader and Head of Enterprise Architecture at Micro Focus, a $3 billion revenue business and one of the world’s largest enterprise software providers, where he initiated and drove the strategy and delivery of the company’s $100 million digital transformation in record time upon merging with HPE’s software division, deploying an entirely new infrastructure by replacing legacy technology applications with an ecosystem of Software-as-a-Service (SaaS) solutions. Prior to that, he was the Finance and Administration CIO at HPE, and was even previously the CIO at DaimlerChrysler UK, since divested and renamed to Mercedes-Benz UK.
Welcome, Paul! You’ve been leading transformations at large-scale companies (and hopefully you don’t mind me saying this) for a couple of decades now. How has IT changed over the years?
I don’t mind at all! It’s been quite a journey. Well, when I first started out in IT, I was systems manager for an automated warehouse and robot delivery system running on an HP 1000. At the time it was leading-edge technology, but proved to be very inflexible. For example, we doubled the capacity of the warehouse and I had to replace all the IT hardware. I learned about quality control and change management – if I made a mistake, I could stop the factory. What I mean by this, is that change occurred at a much slower pace at the time. IT spent more time maintaining legacy architectures and applications, versus innovating and playing a truly strategic role in the business.
Another example took place when I arrived at DaimlerChrysler UK back in the early 2000s. The IT organisation was focused on delivering IT requirements and provisioning services across our retail locations. The team was all about maintaining existing technologies and keeping the lights on. I was able to change the dynamics by reducing support costs and partnering with the leadership team to invest in change supporting the company’s strategies. As my roles progressed throughout the years, digital transformation became more and more of an imperative, and quite frankly, a competitive advantage. This realization prompted me to lead complete transformations at companies like HPE and Micro Focus.
The truth is, IT has evolved into a strategic lever. Where conventional IT organizations served purely as technology enablement arms, now IT is ingrained in the entirety of the business, defining end to end processes and determining which technology solutions can best support these processes to reach bottom-line business objectives. We’re advisors looking to innovate.
Absolutely agree — IT strategy is the foundation for a successful business. Throughout your career, you witnessed the rise of the cloud. Tell us more about what that was like and how you approached delivering enterprise-wide change using this “new” technology at the time.
The rise of cloud presented challenges and opportunities for IT, but the benefits and opportunities certainly outweighed the challenges. Working for a hardware manufacturer meant that the opportunities for cloud were limited.
My first experience custom developing a mobile application to capture travel expenses, for example, was challenging. Yet when I had the opportunity to transform the landscape for HPE’s software division, prior to the sale to Micro Focus, I was able to embrace SaaS which dramatically speeded our ability to progress.
The major challenge remains to enable different SaaS products to work seamlessly together. As applications become more composable (i.e. breaking processes and capabilities into components vs larger end to end applications), the ability to work seamlessly will be the key to success.
It’s true that some of the incredible transformations you led wouldn’t have been possible without the cloud, like the massive initiative you undertook at Micro Focus. What role did the cloud/SaaS play in that transformation?
You’re absolutely right. First, it’s important to understand that HPE’s $3B revenue software division (where I was the technology change lead), was merged with Micro Focus in 2017. As a result, Micro Focus’ software license business was running on on-premise legacy applications – applications that were expensive to maintain and that lacked the agility to meet the changing needs of the business and our customers. The entire initiative was centered around driving the adoption of cloud and SaaS. I was in charge of eliminating these large, old and expensive IT platforms and replacing them with more agile SaaS-based solutions like Zuora.
While we considered implementing an ERP such as SAP, the pace we wanted to move would not have been possible using such rigid systems. The key to our success was to embrace the business model and processes, versus building customized applications that hindered agility and scalability. By embracing SaaS-based solutions, we were able to respond quickly to changing customer needs and enable our sales team to help scale SaaS-based subscription opportunities.
You’ve certainly experienced the power of SaaS! So, what brought you to Zuora?
IT is always changing, but now, in response to new subscription business models, which Zuora is powering, it’s happening even faster.
The change is not something that I immediately saw while at HPE, but as we merged with Micro Focus, I recognized the chance to start fresh. As a team, we realized that we needed a different set of systems to truly drive operational efficiency, innovation and more importantly, agility. It was no longer about maintaining old ERP systems, but innovating and creating seamless, automated processes via SaaS solutions and subscription business models.
Zuora’s CEO Tien Tzuo said recently that organizations are beginning to wake up to the power of subscription business models. In my experience – he’s spot on. My career has focused on leading enterprise-wide transformations to support the success of these as-a-service models, and is what led me to Zuora.
If you look at the difference between a single transaction model and a SaaS/subscription model, it’s the ability to drive more engagement with your organization’s customers and to have an ongoing relationship with them. Given the nature of subscription businesses, consistently providing new value and innovation, you’re given a reason to have ongoing conversations with your customers. This ultimately provides organizations with far more future revenue opportunities.
So you know IT like the back of your hand, you’ve seen what an end-to-end set of systems looks like to run a modern multi-billion dollar company, you know what effective transformation looks like. Where do you see the modern CIO getting it right? Are there instances where they’re missing the boat?
CIOs and IT organizations should be strategic and aligned with a company’s need to change and grow. As a result, the role is constantly evolving. Right now, it’s absolutely critical for CIOs to partner with corporate leaders in order to align with the overarching go-to-market strategy and invest in technology that will support that strategy in the future. The CIOs that think of themselves as business leaders, not just technology leaders, are getting it right. We must constantly set aside time and resources to think ahead. It’s important for CIOs to ask themselves, “How much of my time spent reacting to problems or managing ongoing projects as opposed to imagining new ways to help my business?”
You can never feel comfortable in this job! If you’re not constantly thinking about how to provide a better value to your organization, and the end customer, then you’re probably not worth their business, and you aren’t doing any favors for your own.
What does the future hold for IT and CIOs?
As I mentioned before, the CIO role, and the role of IT at large, is constantly evolving. There’s no reason why any business should be constrained from experimenting or launching new imperatives as a result of their technology. You should be able to extend and customize all of your applications in order to meet your business demands. It’s all about elasticity and the power of cloud, the agility of your business.
As organizations realize the value of new business models and technologies (from subscriptions to AI and Machine Learning, and more), CIOs must be prepared for a world of fluidity, consolidation, and new businesses – things that have massive implications for enterprise architectures. It’s our job to ensure we’re establishing a reliable and enduring foundation from which we can better serve customers.
Lastly, any advice or learnings for others functioning in a world of legacy technologies?
One of the biggest learnings is that the SaaS-based model provides companies with a lot of flexibility and agility to rapidly adapt to external market pressures. But technology and SaaS-based solutions alone don’t guarantee success. Just because you have flexibility and agility doesn’t mean you’ll be successful.
Transformation requires seamless, end-to-end operations of all of your systems, as well as organization and process innovation. This means reconfiguring business priorities and offerings, ensuring the alignment of all activities – something that IT plays a critical role in. In order to turn customers into subscribers, it’s necessary to establish a two-way relationship between supplier and customer. Your subscribers need to see continuous value, which is a substantial departure from the traditional single transaction model. That means ensuring your current technologies can be integrated and communicate with each other to avoid any bottlenecks or dysfunction.
Thanks for taking the time to chat, Paul! Look forward to our continued work together.
Likewise, Daisy – excited to be here!