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By Devendra Mishra, Executive Director and Founder, Hollywood IT Society

In unveiling a proposal for the complex and unwieldy state budget of California earlier this year, Governor Jerry Brown described the document as an attempt to address some challenges with no ready solutions at hand. “These are the challenges,” he said. “They are challenges within my own family. I don’t have all the answers…I don’t know if anybody does.”

This sentiment reverberates with me as I think about my industry family in Hollywood, where CIOs and CTOs face unprecedented, complex and unwieldy challenges to transform their businesses for the new information-driven economy. The founding principle of the Hollywood IT Society (HITS) is to promote collaboration among the stakeholders committed to enhancing the growth and profitability of the entertainment industry.

It is in that spirit of collaboration that I offer my thoughts on the 10 most urgent challenges facing M&E in 2015, and my hope that you will participate with us in an ongoing dialog to identify potential solutions.

1. Right-sizing technology-stacks and aligning with business demands
“When faced with a threatening disruptive technology, people and processes in a mainstream organization cannot be expected to allocate freely he critical financial and human resources needed to carve out a strong position in the small, emerging market. It is very difficult for a company whose cost structure is tailored to compete in high-end markets to be profitable in low-end markets as well…It is very difficult to invest adequate resources in disruptive technologies – lower-margin opportunities that their customers don’t want – until their customers want them.” –Clayton M. Christensen in “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”

So, this fundamental question comes to mind: How relevant is the existing technology stack of a studio in order to meet the demands of disruptive technologies? Remember how new systems were bolted on to existing plat-forms over generations, making the stack cumbersome and inefficient in the long run? The implied challenge to right-size the technology-stack and align it with the emerging demands of the business is huge.

In that IT landscape of Hollywood studios, the new requirements of digital, mobile and social media, to name a few disruptions, have to be factored in for the necessary makeover of systems overall. Opportunities may exist to find the trapped value by freeing up certain legacy systems to enable the adoption of what is required to support the new business realities.

While a few proprietary systems—maybe fewer than 30 percent– remain critical to an enterprise, commoditization of many other functions exacerbates the problem and suggests their divestiture or outsourcing. In addition, while the exponential evolution of disruptive innovation has devalued the legacy systems, one wonders how SaaS services can be vital enablers. Reconfiguration of the systems has to begin with a sense of urgency to remain relevant today.

2. Systematization of internal and external collaboration
The paramount question is not whether to collaborate; it is how to. Several technology-enabling collaborative solutions and services for enterprise have come to our rescue in areas from filmmaking to the distribution of content.

A fundamental road block to be overcome within studios, however, is the culture that fortifies the silos for entrepreneurial creativity and protection. Meanwhile, the “Gang of Four” – Amazon, Google, Apple and Facebook – has demonstrated that tolerance, openness, and fairness toward potential partners, developers, vendors and third parties make the size of the pie grow.

Technologies for collaboration that will secure our assets and provide values untold to the shareholders are being tried with success. Deploying a new collaborative IT governance model is also an essential step in breaking down silos and creating cross-enterprise solutions.

3. Restructuring information and technology organizations
“Business is likely to be loaded down with yesterday’s promises. These include products and services that no longer contribute….A ship that spends long periods of time at sea needs to be cleansed of its barnacles or their drag will deprive it of speed and maneuverability.”
—Peter F. Drucker in “Managing in Turbulent Times”

Our enterprises–particularly the IT organizations, which have weathered turbulent times– are overdue for a makeover. Considering the disruptive innovations of the Internet, net-works and digital technologies, how should the IT function now be organized?

In most studios, the CTO implements technology to enhance the process of story-telling by offering new production methods. Many of them even have the responsibility to store and secure the intellectual property assets of the studio.

The CIO, on the other hand, enables the business units to carry out their management functions with efficiency, timeliness, control and customer service.

The CTO often reports to the studio production chief while the CIO reports to the CFO or COO. The digital world is blurring the divide between the responsibilities of the CTO and the CIO. Furthermore, in the Information Age, the transformational value of big data and analytics is being realized by all the stakeholders.

Development of a seamless interface be-tween technology and business will be the primary area of focus for it determines how best the industry can seize the opportunities for transformation.

Gartner analyst Laura McClellan’s prediction that by 2017 CMOs will spend more on IT than CIOs has important implications for how the relationship between the CMO and CIO will change as marketing becomes more technology-intensive.

How confident are we of the nature and quality of the IT resource to meet the needs of the marketplace? What percentage of the IT workforce consists of Millennials, for instance? The studios recognize that they must each attract their fair share of the best and the brightest in IT.

This may require that we also change our mode of operations in terms of administrative practices.

4. Adopting agile methodologies for system development and implementation
To say that the speed of change as driven by technology is exponential is not an over statement of reality. How do IT teams shift from a waterfall application development process to an agile development process?

Today, getting the competitive edge is about speed to market and failing fast if the change implemented is inappropriate.

New economy companies like Amazon, Apple, Facebook and Google experiment freely at the closest point of contact with customers, while building upon their success and learning from their failures.

What will it take to incorporate this culture in the studios if we deem it to be a requirement of the information economy? We cannot afford to maintain the historical practices of multi-year business plans, long project cycles and mega dollars of investment for large scale projects when the obsolescence of technology and skills loom large.

5. Deployment of big data and capture of metadata
“Data has become the new factor of production, like labor, land and capital.” –Larry Downes and Paul Nunes in “Big Bang Disruption –Strategy in the Age of Devastating Innovation”

I do not think there can be any debate about the intrinsic value of data analytics, particularly when consumer behavior impacts the monetization of products and services. We are also reminded that meta-data–data about data–is essential for search engines to deliver instant gratification to consumers, in addition to achieving efficiency within an enterprise.

There is a natural barrier in organizations today when the production team has no incentive to capture metadata. Further, data mining is not a natural and spontaneous endeavor in creative organizations.

The intrinsic business value obtained by stitching together and analyzing data re-mains to be universally recognized.

So how do we motivate production executives to record metadata for the benefit of enhancing consumer engagement? Imagine the impediment faced in furthering sales to a new territory when localized information is not available and digital rights management systems are often not integrated! The amount of third party industry data purchased by a studio is often for data they have supplied in the first place.

The gold here has to be mined with unprecedented organizational effort and expertise.

6. Connecting with billions of consumers and delivering content
Hollywood studios are trying to evolve from historically B2B enterprises to become B2C marketers, which is a Herculean task.

Today however, Hollywood benefits from its new customers having instant access to “near complete market information” at their fingertips, anytime, anywhere and on any personal device. Social media companies, like Facebook and Twitter, have tapped into a deeply rooted instinct for humans to collaborate with and improve on the work of others.

The multiplicative networking effect, first enunciated by technologist Bob Metcalfe, has produced a peer-to-peer sharing reality which is being harnessed by producers of entertainment.

The challenge of intelligent deployment of mobility may prove to be the greatest opportunity for sales growth of the industry.

7. Seeding the cloud to be a rainmaker
The Cloud over the industry is welcome for its ability to handle surges in transactions, make content available anywhere and at any time, facilitate new business models and generate economies of operation where cost and usage are synchronized in time. Cloud computing has the potential to become a utility that IT folks have dreamed about for a long time.

A business no longer requires large financial outlays in hardware and human resources to deploy Internet–driven service.

The elasticity of resources, without paying a premium for large scale, is unprecedented. It holds the promise to transform a large part of the IT industry by making software even more attractive as a service and shaping the way IT hardware is designed and acquired.

The industry has to clear away the clouds from the true potential and obstacles inherent in any technology bringing about a paradigm shift.

Numerous issues have to be addressed, including:

* Business continuity and service availability;
* Easy extraction of data and programs from one site to run on another;
* Data confidentiality and auditability;
* Scalable storage from low to infinite capacity on demand;
* Restrictive software licensing practices;
* Security and protection of intellectual property.

The technology enablers and service providers will formulate solutions with their customers.

8. Navigating a plethora of digital technologies
It is amazing how the new digital technology enablers are often startups or companies of smaller size. We are at the early stages of their evolution and consolidation of this technology industry is distant on the horizon. While these emerging companies offer solutions for digital workflow, data analytics, mobile apps and cloud computing, they do not dominate like SAP or Oracle, which had ERP solutions that multi-national companies had to have.

For an IT executive at a studio it takes an inordinate amount of due diligence, fraught with risk, to select a vendor today for a digital technology solution. I have noticed the creation of positions for technology-savvy executives in the strategic sourcing department of studios facilitate the difficult decisions of technology identification.

It appears that most of the enterprise vendors have the unique opportunity to take a leadership role in helping their customers transition to this new environment at the expense of their legacy hardware and software license revenues. Companies like Salesforce, Workday and NetSuite are leading this new charge with the incumbents SAP, Oracle, HP, IBM and Microsoft forced to reluctantly fol-low. There is also a shift from a license-based sales model to a subscription based sales model.

Peer-to-peer learning has become para-mount for studio CIOs and CTOs.

9. Building company platforms
“People need simple, secure, powerful, integrated and user-friendly ways to create, consume, purchase, share and manage their content. They need to connect with other – easily and often. For all these reasons, they need a platform.” — Phil Simon in “The Age of the Platform”

These platforms are rooted in technology. The most vibrant platforms embrace third party collaboration to seek and foster symbiotic and mutually beneficial relationships with users, customers, partners, vendors, developers, and the community at large.

The Gang of Four has demonstrated how the platform is instrumental in building the new economy. For example, through the Google platform, millions can compose email mes-sages, listen to music, make phone calls, do research, make purchases, create Web pages, field Web-based surveys, create spreadsheets; and do about 100 other things.

I believe that with the numerous avenues for entertainment offered by a studio, whether it is film, TV, home entertainment, theme park, cruise line, interactive, publishing or video game, building a platform is highly desirable.

10. Protecting intellectual property and the enterprise
The recent malicious hack attack of Sony Pictures is a testimony to how vulnerable an organization is against threats of evil in cyberspace. The threat that traumatized Sony Pictures is a “black swan” event in which a hacker systematically worked through the entire organization’s computer network with untrammeled access, and proceeded to extort and seek revenge.

The combination of the Internet, networks, social media, mobility and digital content has made organizations porous in order to provide instant gratification to consumers. This is the world we desire but the inherent threat to security and privacy is the exorbitant price we pay. I will not be surprised if the lion’s share of capital investment for IT at studios in the years ahead is allocated to protecting their assets.

Selection of technologies, building of system architectures, integration with existing systems, establishing the necessary governance and ensuring safe practices are some of the gargantuan challenges where a clear path is yet to be envisioned. Collaboration can lead to our industry becoming more secure with optimal investment.

In closing, I wish to leave you with the thoughts of Geoffrey A. Moore, the visionary who wrote “Crossing the Chasm: Marketing and Selling High-Tech Products to Main-stream Customers.”

Moore wrote, “Every decade there is a game-changing wave of innovation in IT. In the 1980s, it was the PC and automation. In the 1990s, it was about the Internet and connecting up all those PCs into client-server applications to create systems of record. For the past decade, it has been consumer applications running on smart phones and tablets….In the coming decade, it will once again be about connecting up the digitally empowered end users, this time through what we call systems of engagement. As with each of the prior decades, this calls for new standards and protocols, new architectures and development methodologies, a new talent pool, and a new approach to managing.”

Let the exchange of ideas continue with vigor and a sense of urgency!

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Editorial Director of the M&E Journal and Chief Strategist for MESA, Devendra Mishra is recognized as an eminent thinker and practitioner of supply chain management. An adjunct Professor of Decision Sciences at Pepperdine University, he has previously served as President/COO of such companies as LIVE Entertainment, VCL-Carolco, Lieberman Entertainment, and Technicolor Worldwide Media.