Lenovo’s Arthur Hu on the CIO’s customer-centric imperative

Arthur Hu ranks among the few IT leaders who wear the hats of both CIO and CTO. As the CIO of Lenovo and the chief technology and delivery officer of the company’s solutions and services group, Hu says the dual role lends him “the unique advantage of guiding our teams in developing cutting-edge technology solutions and marrying them with current trends to ensure we are at the forefront of delivering the best possible solutions for our client’s current and emerging needs.”

Underlining the need for building a customer-centric mindset, he says IT leaders must “adopt a methodology that elevates customer experience as a top-level metric, on par with technical and functional requirements that technology teams have traditionally been responsible for.”

In a wide-ranging interview with CIO.com, Hu talks about crucial areas such as what it takes for an IT leader to elevate customer experience, open a new revenue stream, and make the enterprise nimble.

With several lines of businesses and thousands of employees and applications, it is a tough ask from an IT leader of a company such as Lenovo to ensure seamless day-to-day operations on one hand and business growth on the other hand. How do you do it?

Hu: As the CIO, one of my key objectives is to build technology, people, and processes to not only power Lenovo’s business model and operations, but also to deliver the best possible solutions for our client’s current and emerging needs. To do that, you must have a customer-centric mindset and understand the context in which your technology is being used. I’ve played a key role in Lenovo’s service-led transformation, as we transition from being a hardware business to one that provides end-to-end technology solutions to support business growth. I’ve not done it alone, however. A strong team and culture are integral in making sure our operations run smoothly, and we’re constantly scanning the landscape to identify technology trends so that we’re always on the front foot in delivering to our customers.

How can CIOs foster that customer-centric mindset and inspire their teams to design and deliver better customer experience?

If you haven’t already done so, adopt a methodology that elevates customer experience as a top-level metric, on par with technical and functional requirements that technology teams have traditionally been responsible for. This will set in motion a set of changes that will reorient engineering work towards experience, satisfaction, and adoption. Taking Lenovo as an example, something we have done well is commercializing our internal IT capabilities. This allows us to pressure-test our products and services before bringing them to market. The reason that this is important is because the enterprise business model has shifted away from delivery towards alignment with outcomes. It is no longer enough to manufacture and ship a piece of hardware. You must provide value by aligning with the customers’ ultimate business goals. However, you can only pivot to a customer-outcomes mindset if you have an intimate understanding of customer needs and the context in which your technology is being used, which is really where CIOs can play an integral role.

Contributing new revenue has become a key goal for CIOs today. How are you opening new revenue streams for Lenovo?

Lenovo’s service-led transformation journey since 2021 has fueled impressive growth momentum for the company. The Solutions and Services Group (SSG) has been a major driver of this success, with its revenue reaching a record US$6.7 billion in FY22/23, growing by 22% year-to-year, and boasting a high operating margin of 21%. Our shift towards non-hardware-centric solutions and services has been a key factor in diversifying revenue streams, with these offerings now accounting for over half of SSG’s revenue. This strategic move has allowed Lenovo to tap into new markets and customer segments.

Lenovo has built one of the most complete technology portfolios in the industry — from client, edge, cloud, network, and intelligence solutions.

To handle complex transformation projects and respond quickly to external threats, CIOs must ensure their organization’s tech stack is lean and nimble. What’s your guidance for IT leaders on this?

According to Lenovo’s Global Study of CIOs 2023, the biggest challenges CIOs are facing include insufficient budgets for digital transformation, concerns about organizational resilience, and expanding responsibilities beyond their traditional roles.

It’s also seen that CIOs (nearly 81%) are hyper focused on ensuring that their tech stack and teams are becoming more agile and resilient. They’re turning to ‘as-a-service’ solutions to streamline their tech stack and reap the benefits of this consumption-based model. In fact, the study suggests that nearly 92% of CIOs are considering adding new aaS solutions to their tech stacks over the next two years.

With a consumption-based model, CIOs can pay for resources as needed, making it a cost-effective option in financially constrained times. This approach not only streamlines tech stacks and teams but also empowers organizations to respond swiftly to market shifts and focus on strategic initiatives, such as AI and ML implementations. By embracing innovation and utilizing flexible technology solutions, CIOs can reduce costs today while streamlining processes to create budget room and pave the way for future growth and resilience in their organizations.

Such solutions can empower them with flexibility, scalability, and the freedom to focus on more strategic activities. Used effectively, they can lower the total cost of ownership as CIOs and IT leaders only pay for what they use or need.

What could be some downsides of ‘as a service’ model for IT? What should CIOs keep in mind before going for everything-as-a-service approach?

Every technology has its downsides. Potential challenges around implementing EaaS relate to governance and control, integration and customization, and security and privacy. The key is ensuring that the ‘as a service’ choice is fitting for the target scenario and desired outcomes, specifically that as an organization, you are willing to leverage the best practices that are part of the offering. When properly selected, the pros of EaaS typically outweigh the cons, especially in today’s fast-moving business environment. Such solutions provide organizations with access to devices when they need them, storage and computing that can flex up and down to meet changing business needs, and full-service support to onboard the mobile workforce no matter where they are located. When consuming technology as a service, leaders get the benefit of technical expertise that is embedded in the offering, freeing their teams to focus on business priorities.

You can see the trend with business growth — the global everything-as-a-service [also referred to as XaaS] market size is expected to grow from $265.4 billion in 2022 to $745 billion, rising at a market growth of 22.9% (Market and Markets). Along with this increasing aaS adoption, we see that enterprises are relying on managed services more because of the flexibility of the pay-as-you-go business model. It is easily scalable, which is attractive for companies of all sizes. It allows organizations to overcome challenges involving equipment ownership and management, overprovisioning of resources, and significant capital outlay.

Leadership buy-in is essential when making technology investments, including for EaaS solutions. To do that successfully, CIOs would have to demystify tech jargon and make clear what the technology can do for the business. To do this well, CIOs or IT leaders need to evolve their roles to include organizational psychology and influence, in addition to being leading technologists.

Being the CIO and the CTO, how are you able to think and plan for the employees and for global CIOs at the same time?

Lenovo is a technology company where one of our key target audiences are CIOs and IT decision makers. Being a CIO myself, I can bring customer-oriented thinking to my business as well as empathy for the challenges industry CIOs are facing. 

Additionally, Lenovo’s tech solutions power Lenovo’s own growth. In my dual role as CIO and CTDO, I have the unique advantage of guiding our teams in leveraging Lenovo’s decades of history in developing cutting-edge technology solutions and marrying them with current trends to ensure we are at the forefront of delivering the best possible solutions for our client’s current and emerging needs. One example is xCloud, a hybrid cloud solution that Lenovo developed initially for our own need of handling rising complexity in our cloud deployment profile. This was eventually deployed to customers, including helping a global new energy company achieve optimum cloud consumption and improve IT operational efficiency.

What new skill sets would a CIO need to remain relevant and successful in the future?

CIOs will have to move beyond just ‘managing’ IT, to driving exploration of new business models. Often, they are charged with leading digital transformation in their companies, creating tangible outcomes and value. The CIO of the future will be required to combine business and technical knowledge, along with evangelism and leadership abilities that can be used to drive strategic corporate growth and increase market opportunities.

The skill sets that were once needed to manage information will also continue to change. Partnering with tech vendors that offer flexible solutions will give the modern CIO tools to succeed. This is a pivotal moment where technological innovation represents incredible opportunity, but also increasing challenges to properly explore new technologies and land them in the business effectively for competitive advantage.