Ep 10: How to Lead a Winning Innovation Strategy Within Your Organization with Ultimate Kronos Group CDO Scott Howitt

‍Evan Reiser: Hi there and welcome to Enterprise Software Innovators, a show where top technology executives share how they innovate at scale. In each episode, enterprise leaders share how they're driving digital transformation and what they've learned along the way. I'm Evan Reiser, the CEO and founder of Abnormal Security.

Saam Motamedi: I'm Saam Motamedi, a general partner at Greylock Partners.

Evan: Today on the show, we're bringing you a conversation with Scott Howitt, Chief Digital Officer at Ultimate Kronos Group. In prior roles, Scott has been a CIO, CTO, and CISO across several industries during his career, giving him a unique perspective into a world of deploying technology initiatives and large companies.

Saam: In this conversation, Scott shares how the CDO role could be an impactful agent of change within organizations, the important fusion of technology and business outcomes, and his view on startups and next-generation technologies.

Evan: Thank you so much Scott, for making time to do this. I really appreciate it. Maybe you can share with our listeners, who might be unfamiliar with UKG, what does UKG do? What is your role as Chief Digital Officer?

Scott Howitt: UKG stands for Ultimate Kronos Group. It's the merger of the old Ultimate Software and the old Kronos Software companies, and they came together. Kronos mainly did timekeeping, and Ultimate did more of the HRIS-type software. Bringing that together is a real good synergy of everything that you want to do around human resources, meeting people where they work.

We provide the software to do that. My role as Chief Digital Officer, the CIO, the CISO, and the Chief Risk Officer report into me, and I'm helping, bringing those two companies together, bringing those technologies together, bringing all those foundations together, and really getting us ready to scale up for pretty rapid growth that we're going through right now.

Evan: Scott, one of the interesting things about you and one of the reasons I was excited to have you on our show is that you've played most of these roles at quite different companies, right? You've been a CIO, you've been a CISO, you've been a CTO. When you think about the organization, what are some of the differences in those roles? Where do they overlap? Where are they functionally different?

Scott: Yes, it's interesting because I always see it in a lot of organizations, where a lot of times, they hear about the tension between especially the CISO and the CIO, and it's like, "Oh my gosh. If you two could work together, it'd be like Wonder Twins coming together," right? You could bring a lot of power into the organization. I think the way I ask my CISO to think of it is "Stop being traffic lights and roadblocks when you come into the organization. Think it more like anti-lock brakes and traffic circles, where you're putting good guidelines around the organization."

Really, the safeguard is to help the organization move faster, not slower. Then from the CIO point of view, too, I think somewhere along the line developers have forgotten that developing is an engineering function. There should be some guardrails and safeguards around it. If you work with a CISO, you can really help automate those functions and bake them into what you're doing.

So, security by design, privacy by design, chaos engineering, threat modeling, all those things should really synergize just into the DNA of how you develop software, especially SaaS software, right? If the two really work together, they can bring a lot of power into the organization because you can be developing secure software but doing it more rapidly if you really work together to bring those things into synergized function.

Saam: Scott, a lot of that really resonates. I was thinking as you were speaking, how should a company think about if they need a CDO and when they should bring in a CDO?

Scott: I did a lecture series when I was at my last organization, and it was about the CDO in that role. It was interesting because my thought was, "Hey, CIO, you should never let a CDO into your organization. You need to be the guy who is innovating faster, and you convince them they don't need a Chief Digital Officer to come in." In some cases, maybe that's a little unrealistic. Maybe the CIO is entrenched, maybe whatever.

I do think my real role is chief bridge builder, is really syncing my time in with the product team and then my old IT team and the security guys and really a lot of times in the business itself and saying, "Okay, if we want to go faster, here's how we do it." In a lot of cases, too, it's getting rid of half the tools that you have because you're only utilizing about 10% of them and really lean into the ones that you know are going to be your go-forwards, right?

We had seven different ways to do CICD pipelines, which I see across all sorts of product teams, and it's like, does that really add value into what you're doing, or is it just he knew Jira, the other one knew Puppet and Chef, that's why we went the way we went, right? Again, if you make that automated and seamless, then the question becomes, so why aren't you using the standard method? Just go do that and concentrate on product where we make our money and make our margin, right?

I think that's really the digital guy. It used to be like the CTO was super valued because he brought a lot of new technical thought or innovation into the business. I think the digital officer's real role is a marry-up process in technology and forward-looking strategy like, "How do I hope you get there and really work that way?" or at least that's how I view my role.

Evan: How do you create the culture and system for disruption innovation without losing all the great things that got you to where you are today?

Scott: What I like to do is again back to just asking the simple question like, "Where's the value in this? What are we really trying to drive here?" Two, then I think also, again, you got to look at "Where are we going?" because, again, if we want to be more innovative, we could have just stayed a time clock company and that's all we did and all we did and all we did, but it's a commodity.

What we're doing in the HR space is more innovation, so, hey, how could we make things work better for the employee? How could we maybe, "Hey, you're underutilizing your healthcare, here's maybe a better way to think about it when you sign up" or "Hey, looking at your work schedule, maybe it would be better if you took some more time to do this in the middle of the week," or stuff like that, and really meeting people where they work? I think that's where our value is. That's what makes companies want to buy us, and so really helping people understand like, "Where do we drive value, and how do we drive towards that?" I think is what's important. 

Back to the "How do you disrupt it?" you do got to challenge the status quo like, "Why are you so in love with the process that we have today?" Sometimes there's good reasons, and if there is a good reason, I'll have learned more about the business and so know how to think about it going forward, but sometimes there's not a good reason, and then it's really good to dig and challenge and say, "Well, hey, I think I can come up with a better way to do it. Let's work together and figure that out."

Evan: Are there examples you've had right in your career where by going down to the details, a light bulb went off, right? Any examples where that like getting close to the metal, getting close to the real world helped you identify disproportionately big opportunities?

Scott: Yes. One of the biggest mistakes that I think technologists especially make is, I've been in a lot of organizations where, oh, the technology department is a separate floor or it's another building, or whatever. It's like, to your point, go stand in the pit with the boss and see how the pit actually runs. Then you go, "Oh, okay, here's how the technology should work."

I don't know that it's fortunate, but I've had to do like two or three ERP implementations during my career. It's never fun. It's pretty ugly, but yes, go understand how we process invoices or go understand how we recognize revenue. Once you do that and you can speak in their language. Techies, we're really good at not having much respect for people who don't understand all the techno jargon that we use.

Guess what, the CFO is thinking the same thing when you don't understand EBITDA and how revenue is recognized and what AAR is, and what PEPM is. You need to be like a UN translator. You have to know multiple different languages to be a successful executive, and I love how you said it. I think of it as a sign wave, right? Sometimes you're way up above the business doing the strategic plan but occasionally you got to dive down and get exactly where the troops are and understand what they're doing and then when you've got a good handle of it, start pulling back up again and rearranging all the pieces so that it falls into place.

I think too often technologists are like, "Hey, I'm just a technologist. I don't need to understand the business." It's like, you have no purpose in life if it were not for the business. Too often, technologists forget that, yes, they're here to support the business, not the other way around.

Saam: I guess maybe it'd be interesting to hear about some of the specific technologies you're most excited about right now. I don't know if there's one or two new technologies that you've intersected recently that you think really can drive business outcomes, and it'd be interesting to hear what those are.

Scott: I'm seeing really cool behavioral technologies come out that are looking at how APMs are working and identifying, "Hey, I think there's a security problem because I know what the happy path on the APM looks like, and something's going outside the realm of the happy path or maybe the performance is really getting bogged, so I think something's getting attacked or whatever," and I see that.

In fact, it is sad because I talked to one company that I had been looking at for a while since their incubator stage, and I thought they had some really cool technology. I met with them, and they're like, "We can become behavior DLP," and I'm like, "Oh my God, DLP? Why would you get in that space? It's a horrible space. It takes up tons of resources."

They're like, "Well, that's the only way the security guys will recognize them." I'm like, "Oh, no. That is the problem." There's technologies out there that we don't have a name for yet that really take advantage of the ability to at least take machine learning, AI, maybe they're there, maybe they're not, that at least take machine learning and understand really complex patterns and make some inferences out of them.

That's the technology that really gets me excited because that kind of insight into behavior will really drive some really cool innovation and some conclusions that I think humans would have never come to on their own. I love looking at all the new technology. I think we're just now starting to see those technologies emerge, and I'm seeing some really cool stuff come out of it.

Evan: Scott, AI is an interesting topic where I think initially, there was a lot of hype, and then I think the realities of today didn't match the hype, the promise, right?

Scott: Yes.

Evan: Do you think there is some substance there? Anything you're excited about the future application of AI or are there ways that you think AI can impact companies like your business in ways that maybe people don't fully appreciate yet?

Scott: Number one, I do think when you finally get the hype around AI and ML, I think we say it a lot, but nobody is for sure what it means. Then once you do get the implication of what it is, you are going through that Gartner hype cycle, and it's like, "Oh, wow. Everybody's on board. It's really cool," and then we see the first products, and you get right in that froth of disillusionment, right?

I think we're starting to see products come out of it where it's like, "Okay, we're getting some actual realization." So, I do believe there's a lot of it, a lot of things that we can do with it. We're exploring it in our organization, too. 

Yes, I can do everything that you would expect a Workday or Ceridian, or PeopleSoft to do. I do talent management. I do timekeeping. I do all those things, but hey, when I watch how the employees interact with that, what can I tell the employee about their work life that can help them maybe be more successful at work or get better work-life balance, or help them to do their job better?

I think then people would think your system is pretty cool that it helps them do that. I'm not sure I'm in love with it, but even the Microsoft email that I get said, "Hey, here's how you spent your day yesterday. Maybe you should do more of this today or whatever." It takes me two seconds to read the email, but every once in a while, it's like, "Actually, I probably could use some time to go do this."

Evan: How do you view collaborating with startups when trying to pull in technologists to solve business problems?

Scott: I do think startups are important. It gives new views on how to do things and all that. I think it depends on the area of the business that you're addressing. If it's a key business function, maybe I don't have as much appetite for taking a risk with a newer technology, but if it's a side business or a smaller piece of the business, maybe I have a lot of appetite for it.

Two, I think a lot of startups you can start small and guide them along. There's quite a few smaller startups that I've done work with but it's like, "Hey, I'll do it but one of the things I wanted is a seat at the table on the advisory board or whatever." It's super helpful because it's two-fold. If advisory boards are set up right, I've seen some that have been set up really well and some that are not so good.

A good advisory board, 50% of the time is all the technologists in the room, the customers speaking to each other about, "Hey, here's the problem I'm trying to solve. Here's this technology that I've seen that's worked. Here's how we're using this new technology. Man, I've learned so much from those things that are just new ways to work that I hadn't thought about before," but it should be like, if the- I've seen some advisory boards where the CEO or the chief product officer or the chief technology officer is an active listener, which is great. Then sometimes they become active defenders of what they're doing, and it's like, "It's not the forum, man. Save active defender for the VCs and all that. You should be just listening and taking it all in," right? It's really important that if you're working with a startup that they want to listen and that you have that ability to have input into what they're doing and where they're going. It doesn't mean they have to take it all, but you should certainly be able to give them that feedback directly.

Evan: What'd be your advice to CIOs or CDOs that are evaluating startups? Outside of evaluating the product, how do you evaluate the company and the team to make sure they're actually going to be good partners?

Scott: Look at their board, look at their investors. We all know-- Man, the longer I'm in this business, I know the PE and JV firms that want to go in and just squeeze it and go public, and I know the ones that want to help grow. We know who those are. Look at who's on their board, who's investing in them, but then go and have a dialogue, too. When I was at Black Hat, my thing with all the vendors is just it needs to be the CEO, the CTO, or the chief product officer.

Otherwise, I don't want to talk to them because I really want to get the heartbeat of, "Where is this company going? What's your vision? What's your exit strategy?" all those things because if it's really a partnership, let's not worry about price. Price is the last thing I get to, right? It's how would we come together and how would we work together if we formed a partnership and it should be a partnership, not a vendor-consumer relationship.

That's what I really look for, is guys that I believe really want to go out there and partner with me. I'll accept that sometimes some of the things that are going to be released aren't quite right. You accept that you're going to listen to my feedback, I think if we have that kind of partnership, we'll be in good shape.

Saam: Connecting this back to transforming the culture of a company as part of being a CDO, what are one or two things you've done to transform the culture around being more open to working with startups?

Scott: I remind people of the-- It used to be the saying in technology as well, "Nobody ever got fired for hiring IBM." It's true, but I bet you there's a lot of CIOs that were asked to finally go out to pasture or whatever because they always took the safe bet. We know what the safe bets are nowadays. It's the Microsofts of the world and all that. It's just safe to go with the old safe.

I can always go in the upper right-hand quadrant and say that's who I should go with. I would say if you're doing that, you're playing to not win, you're playing not to lose, and you can't be in that business today. You have to be in the game to win, and winning means taking some chances, intelligence chances, right? Again, go back and make sure you're doing business with the right person, but we're not just going to make all safe bets.

That's the trap that too many CIOs get into is like, "Oh, I can't make a mistake and fail, and so I'm going to make the safe bet." All that you have to do is say to your executive team, "Hey, this is innovative technology. It might have a few hiccups, but it's going to put us this much further ahead of what our competition's doing, and here's why." As long as you can make that business case and tell them, "Hey, we might have some mistakes along the way," that's okay, because, oh, I'm pretty sure last time I looked, we all experienced Team outages somewhere along the way or Office 365 outages. It happens to all of us, right? It's okay to take chances as long as everybody understands why we're taking the chance.

Saam: That's really well-said. I almost think about it as we often talk about the cost of taking risks, but there's also a cost of not taking intelligent risks.

Evan: The only one thing we do at the end is we do a bit of a lightning round. We wanted to just go through a couple of high-level questions and just want to get your lightning-round version. It doesn't have to literally be one sentence but whatever you think is appropriate. Saam, do you want to maybe kick it off?

Saam: What part of a CIO or CDO's responsibility do you think is most underestimated and its importance?

Scott: Their ability to understand the business and their ability to walk into a room of executives and not be the tech guy in the room, they're just another executive in the room.

Evan: How should a CEO assess the performance of a CDO?

Scott: By the amount of business, not technology, business transformation that they're seeing in the business. Hey, is it easier to close the books at the end of the month? Hey, do we have more customer interaction or more sales happening? That's where you know that the CDO has been successful.

Evan: What do you think is an underhyped technology? What is a technology that you think is having a bigger impact than most people realize?

Scott: I think headless technology is going to have a bigger impact than people realize. The ability that your technology can work on an Echo or in your car or on your phone or whatever, I think that's going to be huge because if I think of all the technological interactions I have on a normal daily basis that aren't my PC, in fact, now my PC is my least favorite method of interacting with people. So, headless technology is huge.

Evan: Scott, is there a common mistake you see first-time CIOs making when they first get in that position?

Scott: I would say the mistake that I most often see CIOs make, and again, I think this could be the same thing that should be said of the digital officer is, again, spending too much time with a technologist and not enough time with the business. I can't stress that enough: how important it is to go out there and figure out what the business is doing. I think that is the CIO. Trust me, I'm a huge introvert.

I love going and hiding in my cave every once in a while. I can do that by going down to the technology floor and just hanging out with those guys. Again, that's not where the money's made. They might be the money enablers. The money's made in the other areas of the organization. I spend a lot of time with the sales team because I want to hear what our customers are saying, and I want to hear what our sales guys are saying. It doesn't mean I'm going to follow all of it. But certainly, I want to know where their pain points are so that when they bring it up at a meeting, I know how to address it.

Evan: Scott, what's a recent favorite book you've read?

Scott: It is funny because I did go back and reread the Phoenix Project again, just because I get something new out of it every time I read it. Two, I got to tell you the O'Reilly SRE book, too, I reread a lot as well, just because it's one of those books that I always get something new out of it. Then I think, for fun, I read Bowden's book on Hue, which is Tet Offensive in Vietnam War. It's actually super. He is one of the greatest historian writers that I think we have right now, and so I love reading all of his books.

Evan: Scott, it's great to have you on the show and really excited to chat more again soon. 

Scott: Yes, I hope so, too. I'm looking forward to it.

Saam: This was awesome. I can't wait to go back and listen to it myself. A lot of really good nuggets shared. Thank you.

Saam: That was Scott Howitt, Chief Digital Officer at Ultimate Kronos Group. Thanks for listening to the Enterprise Software Innovators Podcast. I'm Saam Motamedi, a general partner at Greylock Partners.

Evan: And I'm Evan Reiser, the CEO and founder of Abnormal Security. Please be sure to subscribe you never miss an episode. You could find more great lessons from technology leaders and other enterprise software experts at enterprisesoftware.blog. This show is produced by Luke Reiser and Josh Meer. See you next time.

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