The customer and digital sovereignty are central to transformation with Les Ottolenghi – CIOitk #23

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Introduction:

This week I’m joined by Les Ottolenghi who is the EVP and CIO for Caesars Entertainment.

In this episode, Les shares his perspective on how the CIO sits at the epicenter of strategy, execution and value creation within the enterprise. He talks about his journey to modernize 40-year-old systems to create a modern digital platform that increases value for customers. Les describes how business conversations start with the customer and the importance of respect for their data. He brings our conversation full circle to explain how the CIO plays a central role in this evolving process.

Links:

Les Ottolenghi Twitter: https://twitter.com/LesOttolenghi

Les Ottolenghi LinkedIn: https://www.linkedin.com/in/lesottolenghi/

Caesars Entertainment: https://www.caesars.com/corporate

https://soundcloud.com/cioitk/the-customer-and-digital-sovereignty-are-central-to-transformation-with-les-ottolenghi-cioitk-23

Episode Transcript:

Tim Crawford:               Hello and welcome to the CIO In The Know podcast where I take a provocative, but pragmatic look at the intersection between business and technology. I’m your host, Tim Crawford, a CIO and strategic advisor at AVOA.

Tim Crawford:               This week I’m joined by Les Ottolenghi, who is the EVP and CIO for Caesars Entertainment. In this episode, Les shares his perspective on how the CIO sits at the epicenter of strategy, execution, and value creation within the enterprise. He talks about his journey to modernize 40-year old systems to create a modern digital platform that increases value for customers. Les describes how business conversations start with the customer and the importance of respect for their data. He brings our conversation full circle to explain how the CIO plays a central role in this evolving process. Les, welcome to the program today.

Les Ottolenghi:             Thank you. I’m thrilled to be part of this podcast.

Tim Crawford:               Les Ottolenghi, you are the Executive Vice President and CIO for Caesars Entertainment. To get us started, why don’t you take a few minutes and tell us a little bit about yourself, and your perspective on the CIO role and your role there at Caesars?

Les Ottolenghi:             Great. Listen, I love being a CIO. My perspective is this is perhaps the most strategic role of an executive in any enterprise, and when I say any enterprise, I mean any company, institution or organization that is applying technology in the world that we live in today, the digital world, the connected world. It is at the epicenter, maybe the heart of the strategy, the execution and the value that is being created in every institution across the globe. It is technology which dominates our landscape. It’s technology which drives things forward, creates wealth, creates opportunities, equalizes injustice, and allows for the better opportunities for all of us. As a CIO, you’re at the forefront of that and thinking not just about technology, but about strategy. A quick background for my career and how I’ve been a CIO. I started off as the CIO now 23 years ago. I was the youngest CIO in Fortune 500, but I’ve progressed in my career to not only be a CIO within large institutions, but also as the lead technologist for start-up companies, start-up companies which have led to creations like Kayak.com.

Tim Crawford:               Mm-hmm (affirmative).

Les Ottolenghi:             Or in my case, working inside a company, an innovator that helps create an entirely new customer journey or experience and ultimately going from a company like Las Vegas Sands with, really, an iconic founder and entrepreneur, to Caesars Entertainment 2016, where I’ve been leading major digital transformation.

Tim Crawford:               And transformation is actually the first subject I want to broach, which is something that you and I both know it’s an incredibly hot topic, and you’ve been through an interesting journey there at Caesars with regards to transformation. Can you maybe spend a few minutes and talk about that journey and what you’ve experienced?

Les Ottolenghi:             Well, it’s been an exciting and challenging journey as all digital transformations are. And as you know, as a CIO, it never lacks for a moment of what is unexpected. So when I arrived at Caesars in 2016, I found the technology environment to be less than current. So, average age of the systems was 18.1 years.

Tim Crawford:               Wow.

Les Ottolenghi:             Yeah, and in the word AS/400 was the most familiar technology category we had, or standard.

Tim Crawford:               Wow.

Les Ottolenghi:             The major systems, like for instance, the hotel or hospitality management system was 26 years old. The general ledger was installed in 1976. The casino management system was 45 years old plus. So a lot of what would be, legacy technology, debt and the need for modernization so that the digital transformation would be really a technology step first.

Tim Crawford:               And there’s a lot to that transformation though. I mean on one hand, I’m sure you’re going from legacy footprints and legacy technology, probably a lot of green screen in there too, but that also requires a shift in terms of the thinking of the CIO, the expectations of the CIO and even your team. How did that kind of come into play as you thought about your strategy for transformation at Caesars?

Les Ottolenghi:             Well, it really started by not thinking about technology at all. I started thinking about the business position that technology could enable for the company, and appealing to and convincing the CEO and the board of directors that in fact we would have to make this journey in order to not only save money, but of course modernize our technology, but better engage with the customer. So we have to look outside in first. What is the customer’s journey? What is necessary about value that we create with the customer, and how does technology make that happen? So it was a very strategic conversation to begin with in the role of the CIO. And really, it began by talking about what is a digital platform and how does this company, Caesars, become a company operating on a digital platform, ultimately a digital company. And that was the approach, that was the language being used, and it was the level of conversation and convincing that had to go on to make a massive transformation ultimately happen. And I’m happy to provide some detail to that. All of it’s public information, but we’ve literally modernized our entire technology estate in 30 months.

Tim Crawford:               Wow, 30 months?

Les Ottolenghi:             Yes.

Tim Crawford:               That’s a lot of ground to cover in such a relatively short period of time.

Les Ottolenghi:             Yeah and it was, to your question before, really important that it was more than the technology in terms of the question that we had to ask of our colleagues. It was, what are they doing in terms of delivering value? What does the customer engagement yield look like? And how would we then enable that with better technology and processes? So whether it was real time offers versus offers that would have latency of maybe six weeks, or would it be a casino floor of the future where it was more focused on AR and VR and clusters of customers sitting together in lounge or fan cave type environments as opposed to sitting alone by themselves at a slot machine or a table game? And would we in fact think about the entire posture of the company being digital as a way to accelerate trust with the customer through better security, better respect for their digital sovereignty, or their digital integrity of their own information? And ultimately could we engage better with technologies, so that ultimately this would be a digital platform with a digital relationship?

Tim Crawford:               But you said one other thing, Les, that that kind of struck me, which is you started with the business context and the customer as kind of your North Star. And this is something that I talk about as the differentiation between the traditional CIO and the transformational CIO. That being the latter, the transformational CIO, being very business centric or customer centric. As you think about that customer centricity, and that as well as an incredible focus, important focus for companies today, across industries, can you maybe talk about your perspective on how you approached customer engagement? Maybe where you got started with that? And the other piece, especially in your line of work that I’m curious about is loyalty. So maybe we could start with how you got started in understanding the customer and starting with that conversation, but then how that evolved over those 30 months.

Les Ottolenghi:             Well it was 30 months here and a … what I would like to think of, and I can’t believe I’m saying this, a 26 year journey, but 25 to be exact. Understanding what customer behavior looks like in a networked world. So if I go back to the very first major effort that I made at this … in a corporate environment prior to my first startup out of college, which was a software company that I happened to get lucky with, and I sold it within like four years and I made a bunch of money. I didn’t know how I did it, but I did it.

Les Ottolenghi:             But going forward from that, going through the formal training business school, etc, and launching Holiday Worldwide on the internet in 1994, it was all about learning where customers or consumers were with technology and what their behaviors look like. And ultimately defining four values that always transcend all business models, which is being able to offer something of value in a digital form that’s easily accessible, matching customers between one thing that’s been made, and the one thing that they want to consume, creating a set of tools for them that ultimately allowed them to this matching and consumption of digital information, or setting up their own experiences, or doing things in a way that they want to do it. In other words, they’re in control, and that they have lots of exchange of value of whatever it is, reducing the amount of time to find something or being able to get the best seats at an entertainment venue, or find the restaurant they want to find. For example … or getting the best price at a hotel room is another example.

Les Ottolenghi:             And then, ultimately setting standards from everybody … for all other parties that work with you in the supply chain to become more of an ecosystem. And so we started from the outside in, and that’s to answer your question very specifically, went to, what are the customer behaviors that are important today? So let’s take one example. I don’t want to wait in a line to check in. No one wants to wait in a line to check in, right?

Tim Crawford:               No, of course not.

Les Ottolenghi:             Right, it’s the worst thing. You don’t want to do that. So what you want to do is you want to say, “Listen, we’re in the 21st century. I have a phone. Tell me when I’m going to get to go to my room or point me to something where I can put my phone against it, or I can put my ID in it, and give me a key if you don’t have the ability to open the lock with the phone, and I’ll just go straight to the room myself.” So we shifted that whole dynamic from basically avoiding, if you will, subtracting the front desk to really shifting at our … so a number of our properties, over 30%, up to 40%, of all check-ins to not having to go to the front desk. So it was like, what was the pain point? Let’s figure that out. And that’s where we started. And by measure we added in … you said loyalty, we added in a service representative by the name of Ivy, who would provide realtime insights to all of our guests when they checked in in Las Vegas. And Ivy would talk to them as not only a text bot, or a chat bot, but actually a real human when we needed to escalate certain questions, so that we’d have a full concierge experience from the moment somebody placed their foot across the door of one of our properties.

Tim Crawford:               Interesting. That’s really interesting, and I’ve experienced some of those new technologies. I’m curious how the conversation went with regards to where best fits in and where you might say, “We want the customer to have that human connection, that human interface, such that yes, we could put technology in to a particular process, but because we want to have that more personalized, that more human to human contact, this isn’t the right place to do it.” Have you ever run across that as you’ve gone through your conversations over the last few years?

Les Ottolenghi:             Absolutely, and one of the great benefits I have working at Caesars is I have highly sophisticated, intelligent colleagues who get it. In other words, they are the demand when I arrived here for digital technology, and for the best customer experience possible that could be enabled. But when we looked at it, to answer your question, we looked at it from the VIP status. We knew that if we could provide our hosts, who really are that ambassador of that personal relationship, our most important customers with technology that would allow them to see through one screen what’s going on with that guest or that customer. We could improve the relationship by really enhancing the intelligence of each one of our hosts, providing them real time information on the levels of investment that customer had made with Caesars, and ultimately turn around and provide that guest with better experience and in return a higher yield on our transactions, so a much improved yield on our transactions with that guest.

Tim Crawford:               Yeah, and then that understanding of the customer, I would think today is cemented in data. And we talk about data being used in many different ways. Customer engagement is obviously one of those. Can you maybe talk a little bit about how you’re using data specifically to understand the customer and even with the host?

Les Ottolenghi:             Well you talk about this all the time, which is you refer to data as sort of the value of the enterprise, which I think is absolutely true. If you were to say, what is the new gold? People will say it’s the new gold. They say it’s a new oil. It’s a really the lifeblood of an enterprise. And you brought this out in your podcast, which is the data element, if it is contextual to behavior, of your guests in our case, allows you to act on the most valuable asset you have, time, and reduce the latency by which you can communicate something of value to that customer. So what we’ve done is we’ve moved from a data warehouse model to a realtime analytics model. So we’ve taken away out and gotten rid of our data warehouse. We’ve gone to the cloud, we’ve gone with Azure. We actually go to all three major cloud providers and we provide a view of our customer in one place, but with all the analytics stacked up against that view of the customer.

Les Ottolenghi:             So we’re not really trying to make more money from them. We’re trying to say, “What is it they like? What don’t they like?” And then based on that, what can we provide them in terms of a communication that would make their experience better? What optionality could we give them for their experience? So the data element is huge and we’ve been through master data management, we have a four phase project, we’re through the second phase, in the middle of the third, and we’re now rationalized with all of our data in Heroku and Salesforce. So we’re the largest instance of Heroku out there, and it’s a single view of our customer from all our source systems, which we never had before. We’d go dark in dark data, you know?

Tim Crawford:               Yeah.

Les Ottolenghi:             It’s like, oh my God. And that latency frankly was a loss of value to the customer, and loss of EBITDA to us.

Tim Crawford:               Yeah, and it’s been proven out time and time again that a happier, more engaged customer is actually a customer that will spend more money with you.

Les Ottolenghi:             Unquestionably, and that is a fantastic point. You’ve talked about this again in your podcasts, which is what does that customer engagement look like? And I think for the customer, the customer begins to develop values in … if you subscribe to this idea of digital platforms, which I think are reasonable because you look at Google, Google is a digital platform. Amazon is a digital platform. Their outcomes happen to be an advertising and search company, and then another case, a retail and a logistics company. But whatever it may be, the data drives this and then the customers by level of engagement on that platform develop additional relationships with those companies. And those companies in turn provide new services. So when we started thinking about our casinos, we’re like, “Wow, do you think people want to sit at felt tables all the time?” It turns out, no, they want to go from a day club to a night club, to the restaurant, and they would like to actually do some sort of boxing with Apollo Creed in a VR setting out on the middle of our casino floor while people are doing karaoke on the side, by the way.

Les Ottolenghi:             And then we launched that in June over at The LINQ, one of our casinos. We could [crosstalk 00:16:59] stuff online. But what’s cool about it is the experience now becomes something more exciting, something you can live with, you can take home. We have a digital ribbon, which goes through The LINQ, that if you win, your face goes across The LINQ, money rains down. It’s a high definition ribbon, but it’s also in color, and it moves, and it changes shapes. And you can sit down at one of the bars at The LINQ, and actually the whole surface of the bar is a video game surface.

Tim Crawford:               Wow.

Les Ottolenghi:             So you can play video games on that with the other customers. My point in that is, to your question, where does the customer go? The customer goes to creating further engagement of their own, and they start to tell us through the data what it is that they really want. We look at behaviors, we measure those behaviors, we figure out patterns and then we move on. And I could go on and on, because we’ve just gone into sports betting in a huge way, and it turns out people love to bet on sports, which just happens now to be legal across the country as opposed to just Nevada or New Jersey.

Tim Crawford:               Sure. And I would think that when you think about customer engagement and you think of customers, and I was trying to go back to my own experiences as a casino guest of a number of years, and across different properties, different companies, and in kind of comparing and contrasting what I like and dislike about the different experiences, I kind of thought, “Well maybe there are two dimensions that you think about a customer.” And this could be related to just about any industry, but there’s one that differs based on their spend or engagement. So if I’m a whale or someone who spends a lot in a casino, or spends a lot of time in a casino, or at your properties versus someone that maybe goes once a year, plays the penny slots, nickel slots, and doesn’t spend a lot of a lot of time at the property. So that being one, that spend, being one dimension.

Tim Crawford:               But then the other dimension being kind of the characteristics of the experience of what they like, and I would think that depending on whether you’re talking about The LINQ, or talking about Caesars, or talking about one of the other properties, there’s a different clientele that you’re attracting, or either purposefully or secondarily that comes into play there. And so maybe a segmentation, if you will. How do you think about those pieces when you think about customer engagement, and customer data? And I’m not asking you to divulge any secrets there.

Les Ottolenghi:             Sure.

Tim Crawford:               But just, generally speaking, how do you think about it that might be applicable for others that might be listening to the podcast?

Les Ottolenghi:             Yeah, and I think those are great constructs, and ways to define and think about it. The truth is Caesars has been the leader in this approach to loyalty to segmentation for years. The company priority, my tenure, has been using data analytics, customer segmentation more successfully than any other company in the casino or integrated resort business, and perhaps in any other loyalty business. We’ve have been very successful and sophisticated, experienced, marketing executives who think about this all the time and do it at a significant level. And what I would suggest as we do that segmentation, we absolutely break it down. We even have a program in our loyalty that goes gold to platinum, but goes to something called seven stars. And beyond that when, not even the loyalty program, we break down our play on the casino floor or our hospitality, we see the segments as important around those two dimensions spend and behavior.

Les Ottolenghi:             What’s interesting is the behavior part of it, truly does, depending on how digital you are, and how engaging, how open the options are for the guest to configure their own experience, translate into better yield and better spend. So when we do more on the behavior side, we get better returns on our transactional side. But there’s a third dimension I would offer up, which is a time dimension. Everyone thinks about the friction of time of buying a ticket to the movie theater. You buy it in advance on your phone, or you go through the line at the airport, and you don’t want to pull out a paper ticket, just show the little QR code and you’re going through. There’s this benefit on time, which we’re looking at experimenting with in how to manage.

Les Ottolenghi:             Yeah, so in December we’re actually opening up an innovation center called Black Fire. It is a public/private joint venture with UNLV, and this cooperation is an 88,000 square foot building over in the Harry Reid Science Park. It’s brand new. It is supported by the major technology companies. Caesars is the private entity, UNLV is the public entity, and all the research is around the new models of experience. So whether it’s smart bathrooms or zooming to the room, so you can completely subtract the front desk, or how about machine to machine types of experiences? and what I mean by that is, if you came to a casino and you put money down for betting on the table, or you put money in for the slots with your card, you have a certain amount of time you spend on that, but when you go walk into the restaurant, you’re not wagering. What if you had the ability to wager while you’re walking to the restaurant? You could do it machine to machine type … you have your own AI, in essence, type of experience, where time becomes the most important factor. You see this in video games. We have a great relationship with Microsoft. We have Xboxes in our fan caves. We do all these e-sport tournaments. We do like Gears of War finals, and so on.

Tim Crawford:               Sure.

Les Ottolenghi:             And what you see in the behavior on the video game side is what we see translating into the real world of what we do in the casino. So we’re starting to see that time matters. In the games, you have Battle Royales like Fortnite, Apex, something like that.

Tim Crawford:               Sure.

Les Ottolenghi:             People play for a period of time, but they’re ready at a certain point for it to be all over, and there is a declared winner. We think there are ways to do that in AI that you can put in place that is not to learn about somebody and find out their deep data secrets. It’s to actually represent them in their experiences, and that’s where time comes in and ultimately we’re starting to research that over at Black Fire.

Tim Crawford:               That’s fascinating, absolutely fascinating. But kind of to your point of learning more, and especially when we talk about customer engagement and learning behaviors of individuals, I don’t think you can talk about customers and data without really kind of bringing in the subject of privacy, and of course compliance, and cybersecurity come into that too. How are you thinking about that balance? Because I think it’s more of a risk balance that has to come into that conversation. Nobody is perfect, but how do you approach those topics? When you think about privacy, you want to do all these amazing things, but at the same time you don’t want to seem like you’re Big Brother, and anticipating too much.

Les Ottolenghi:             No.

Tim Crawford:               How do you think about that?

Les Ottolenghi:             We think about it and we’ve come up with a term by which to articulate this, as digital sovereignty, and digital sovereignty for our guests. Be completely compliant with GDPR, or in the next few months, CCPA, and anything else that has to do with data privacy and the respect for the guests. Because at the end of the day, this is their data, and also we are compliant, and we are going to follow regulation to the Nth degree, and Caesars has always been that way. We always look at the opportunity for an engagement with the customer around also the respect for the customer, and that has to do with their data.

Les Ottolenghi:             So we’re, in moving through the transformation, have designed our data models and as well as our DEVOPS model, and our overall systems design, our enterprise architecture, if you will, when you put all this together in a way that allows us to be fully compliant with all those regulations. And we are pointing towards an ability to do this on a self-service basis for our customer. Because we really think the more that you can assure security and and respect for the privacy, the better the relationship is ultimately with the guest. And I think you’re spot on in what you’ve said before in your previous podcasts, and asking me this question today in how we need all of us as CIOs to understand that model of digital sovereignty.

Tim Crawford:               Yeah, and you’ve brought up two very key points that I think are very much interrelated. One is your business conversations start with the customer. And then the second that you just mentioned is respect for the customer, as two kind of focal points that you’ve highlighted in this discussion.

Les Ottolenghi:             Indeed.

Tim Crawford:               As we kind of wrap on this episode, I always like to ask this question of the guest, and that is as we think about the CIO role and think about where things are headed, what excites you most? I mean, you’ve had the opportunity to be a CIO for a number of organizations, and you’ve seen a lot through that. What excites you most about today and where we’re headed, and the role that you have?

Les Ottolenghi:             What excites me most about today is that the CIO sees everything. CIO sees the entire enterprise or institution organization that they work for. Nothing isn’t touched by what the CIO does. It’s tied to earnings. It’s tied to Operations. It’s tied to Human Resources. And it’s mostly tied to the relationships in that business or institution’s ecosystem. And ultimately, it’s tied to that guest in our world, or our customer. And what’s exciting about that is it’s operational, it’s strategic, and ultimately can drive the success of the company. So the technology that we’re privileged to have the responsibility for and the direction to help lead an organization with becomes now this very valuable asset of the company to operate from. And I think the role is more C-Suite, more executive, more strategic than it ever has been. The role is now joining Boards of Directors of other companies in Fortune 500. It likely will become, as security becomes even more important, an absolute necessity for board governance. And so it’s an elevation of the importance of this particular role, which I find very exciting, because 20 years ago you could have heard the term that CIO is irrelevant. Everybody is a technologist. And I was like, “Oh, okay, sure.”

Tim Crawford:               We’ve all heard those terms.

Les Ottolenghi:             Yeah. And I was like, “Okay, sure.” But that’s not what happened. I like what Marc Benioff said this to me one time. He said, “Les, the CIO sits at the right hand of the CEO, and eventually may be sitting in that seat themselves.” So I think that’s why I’m excited about it. It can see all the way down the organization, all the way across the organization, and make a huge impact.

Tim Crawford:               That’s great, and that’s a great way to wrap on this episode. Les, thanks so much for joining the program today. It’s been a pleasure having you on and I look forward to future conversations with you too.

Les Ottolenghi:             Absolutely. Thank you very much, Tim. I appreciate it.

Tim Crawford:               For more information on the CIO In The Know podcast series, visit us online at CIOitk.com, or you can find us on iTunes, Google Play, and SoundCloud. Don’t forget to subscribe and thank you for listening.

Tim Crawford is ranked as one of the Top 100 Most Influential Chief Information Technology Officers (#4), Top 100 Most Social CIOs (#7), Top 20 People Most Retweeted by IT Leaders (#5) and Top 100 Cloud Experts and Influencers. Tim is a strategic CIO & advisor that works with large global enterprise organizations across a number of industries including financial services, healthcare, major airlines and high-tech. Tim’s work differentiates and catapults organizations in transformative ways through the use of technology as a strategic lever. Tim takes a provocative, but pragmatic approach to the intersection of business and technology. Tim is an internationally renowned CIO thought leader including Digital Transformation, Cloud Computing, Data Analytics and Internet of Things (IoT). Tim has served as CIO and other senior IT roles with global organizations such as Konica Minolta/ All Covered, Stanford University, Knight-Ridder, Philips Electronics and National Semiconductor. Tim is also the host of the CIO In The Know (CIOitk) podcast. CIOitk is a weekly podcast that interviews CIOs on the top issues facing CIOs today. Tim holds an MBA in International Business with Honors from Golden Gate University Ageno School of Business and a Bachelor of Science degree in Computer Information Systems from Golden Gate University.

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