“In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”
– Theodore Roosevelt
There have been predictions on hot technologies and trends to watch out for across the board; from vendors, IT consulting companies, media companies (not just IT), academic circles, individuals, groups of various kinds, CIOs or otherwise. The lists, short and long, good and bad, have caught the imagination of many CIOs as well as others within the company who are asking how will it impact us within the company, and our customers.
Any good tools?
It is certain that a few will create enough hype and threaten disruption. Be it personal devices or back-end technologies or even consumer-facing applications, every new tool or technology promises to change the way business is conducted or how we engage with customers. Some are improvements over existing tools, wherein the novelty factor fades away quickly with the response of the existing leaders; the rest fail to follow up on the initial promises.
We occasionally find some (tools) actually providing benefit to the enterprise; some are measurable, while the rest is largely a race against competition to deploy, and ‘look’ savvy. Our employees and customers expect the adoption of almost every new announcement the following day. Thoughts about security or reworking or plain simple ROI are for the CIO to figure out. Vendors and consultants definitely benefit from this running behind the technology.
From the time of the mainframes to the promise of the Internet, social media, and consumerized devices of today, with apps and everything in between, technology has created opportunities and challenges for the IT organization. The pace of change is increased with ubiquitous technology; the accelerator is now on auto with everyone running to stay in place. Can we afford to stay where we are, and be observers or slow adopters with a hope to survive the mad rush to nowhere? Is there a likely respite from the ever increasing pace of changing expectations?
Can you ignore the change?
The technology treadmill will continue to move irrespective of whether we hop on board or not. It is extremely unlikely that we will be allowed to stay on the sidelines and admire the speed at which the treadmill and its players are going. CIOs will have to stay connected to the pulse and inspect every change from multiple angles. Some team members will have to keep jumping on and off the treadmill to ensure that the ramifications are understood and communicated effectively to set realistic expectations.
In most cases, the call on which ones to stay with or discard will remain with the IT organization. Success or lack of it will however be decided by our internal and external customers and stakeholders. Can the CIO get off the technology treadmill and stay relevant? I believe that pragmatically the CIO and now even the other CXOs have no choice. They did not enroll into this madness; but have been made party to it simply by being there; exclusion is not even an option anymore.
I am going back to the treadmill with a quote that I leave behind after listening to some retired CIOs:
“Strangely enough this is the past that someone in the future is longing to go back to.”
– Ashleigh Brilliant.
The setting does not matter, but whenever I meet someone unrelated to IT (with IT folks the discussion is anyway about IT); the conversation always ends up with talking about how they use technology. Maybe something to do with me, so when I met with a CFO of a large company, we predictably ended up discussing the health of their IT systems.
A family-run business
The company had grown organically to become a leader in its industry and now had global aspirations. Family run, it had over the years invested in IT to keep pace with the change in technology. The owners indulged the new generation, allowing them to embrace cutting edge technology, while retaining the legacy systems for the comfort of the stalwarts who built the company. The diversity that thus coexisted was amazing, to just admire the profoundness and marvel at how it all worked together.
Hundreds, not thousands, of almost disjointed small systems supported mission critical tasks across functions and were held together by the experienced hands that orchestrated the business. The management had discussed and debated renewal for a decade to replace the increasing inventory of applications with a contemporary ERP. The decision was always deferred with the fact that it has worked for us so far, so it should work in the future too. We have survived downturns, competition, and grown.
They did not have an IT Head and had never thought of getting a CIO. What about cost of sustaining diverse and antiquated technology? The response was, my IT vendors take care of that. Were employees happy with the situation? It works, so happiness is not the consideration. Was productivity optimal? Grudgingly he accepted that it could be improved upon.
In the second decade of the twenty first century, a successful large enterprise working with neither a formal IT strategy nor a CIO! As I dug deeper, it was evident that the unfettered IT had its advantages. There was agility in creation of solutions where required; business teams worked with multiple partners and even individuals, to get processes or content enabled. Across various offices and functions this was the norm.
Integration and reporting was on another planet. Rarely did anyone agree to figures; and sharing of best practices or synergies in process was unheard of. The local optima did not favor global optima. The CFO was at the receiving end of most of the chaos, but did not see ROI in large scale change. He lamented the fact that competitors were beginning to catch up and technology may have a role in that. The promoters wanted to step back and handover reigns to the next generation and professionals.
Can total or strategic outsourcing solve the problem? We discussed and debated the merits and challenges of this approach, the change management across the diverse enterprise and employees across locations. Giving away the problem will not necessarily solve it. Someone internally will have to own the change, coax it step by step and create lasting change. S/he will have to take everyone along the journey. My humble suggestion to him was to get a CIO.
Uncertainty is certain, that is the maxim of today and the reality for all of us individually, as well as, for enterprises. A repeat of the economic downturn of a few years back or worse, that is the question everyone is pondering over. When the sentiment is down, the first casualty is the innovative propositions as they are perceived to be risky. People withdraw into their anxieties and work to keep status quo. Any remotely disruptive thought is beaten black and blue, unless inaction threatens existence.
So what does it do to the IT budget and the CIO who is being challenged to do more with less, and find resources to create efficiency? How can operating expenses be lowered when a large chunk is allocated to paying for license fees and annual charges for the large systems? Cloud may shift some capital expenses but does not take away the payout for license and support. Can the business critical solutions be shifted to open source?
Even if the shift to open source was possible for some processes, the core ERP systems are the ones that will be resisted by the users. Be it HR or finance, the users do not want to shift away from already stable (take that with loads of salt, considering the patches that continue to make the system unstable) and comfortable systems. The big vendors know that such a shift is almost impossible and continue to hammer the proverbial nails into corporates with increases year on year. So what is the way out for the CIO?
In a CIO forum, I met one of the thought leaders who has and would make it to every list globally. He ran a discourse on the change that IT brings about in an enterprise. He talked about some of the IT-led change projects being executed by many global enterprises that pertained to reducing expenses across the board. Mandated or democratically agreed to, these were being resisted by layers across the enterprise. He preached top-down and bottom-up collaboration to “sell” the ideas along with existentialist discussions. If we did not do this, then the sky would fall upon us.
It was nothing new, as CIOs use this strategy quite well to garner buy-in for most projects. It is another matter that measurement of the impact is rarely done a few years later. By this time, the business context has changed, or we have moved to another crisis, or the people who made the case no longer exist in the company. “Push ahead and ye shall be rewarded,” he expounded. Maybe I have become a cynic, after trying this so many times, to believe that it would still work in the current business environment.
I believe that irrespective of support levels across the enterprise, the CIO should continue to engage with the stakeholders to have them share the pain before embarking on the journey to create colossal change or transformation of the IT landscape. Finding business allies will be difficult, but the journey in solitude is a sure way to achieve martyrdom. After all, we all live under the same sun but have different horizons. So lead the way, but make sure that there are others along with you, not following you.
The words that stayed with me a long time were, “the cultural response was resistive, sometimes proactively resistive.” Hasn’t the world always been the same for the CIO?
“My marketing team is wresting part of my budget of customer facing applications and social media; at the same time, the funding for the new budgeting application is with my finance team. The IT budget is now almost 50% of what it was last year. How do I regain control over my budget?” wailed a CIO in a panel discussion on, amongst other things, trends that are likely to be a reality in the upcoming year.
The panel sympathized with the protagonist CIO and a few from the audience attempted to offer solutions. The debate threw up some interesting thoughts on how the budgetary control could be retained with IT. Ranging from bureaucratic rigmaroles to bullying and many other similar trending behaviors, the suggestions were analyzed and discarded as untenable for either being against core values or not implementable without inflicting self-damage.
The IT budget has been a discussion point for some time now. It predicted the investments made by companies on technology enabled solutions. The industry created benchmarks around the investments linking it to the top line, graded by industry. The maturity of IT usage was linked to this figure and anyone spending below the benchmark was seen as a laggard or highly efficient.
Then came research reports on innovation versus business as usual; ranging from 70% – 90% of the IT budget being consumed on keeping the lights on, while the remaining pittance being allotted to new projects or innovation. Anyone with BAU numbers under 60% was envied and deemed better aligned to the business. Models were created to turn the ratio upside down and reduce the operational budgets to strategic initiatives.
Economic cycles threatened available monies and CIOs were put under the scanner on every penny (or cent or whatever currency you like) they spent. Do more with less was the mantra, and that is now the new normal. Every disruptive technology was seen as the next silver bullet to help the CIO in improving the dialogue on keeping the IT budget to a respectable ratio to the revenue. Cloud will save money, move everything to Operating Expense; virtualization will save the enterprise IT …
In one of the companies I worked, the IT organization was empowered with the operating expense budget, and incremental innovation on existing technology stacks. There was a discretionary budget for exploration of new trends and technology. New projects and initiative budgets were discussed with the business, and IT advised the funding requirements which rested in the business P&L. This ensured that the accountability for the projects was an equal responsibility shared between IT and the function. The success rate was high and everyone loved IT. Since then I have followed this practice successfully in every company.
I believe that keeping the number in the CIO spreadsheet or the business spreadsheet does not take away the control from either. Mature enterprises and CXOs work together to solve real business problems and not bicker over where the budget lies. When was it about control or the power of the budget, large or small? If the CIO is partnering with other CXOs and is focused on the corporate agenda, then it is about getting things done irrespective of where the number lies.
Does this insecurity befit the CIO?
A trend that everyone is talking about, and which figures on every list (priorities, trends, technology, whatever) is Bring Your Own Device/Technology. It has proponents and opponents from various quarters — within as well as outside the enterprise. Opinions and views, recommendations and pitfalls, management tools and security concerns, the endless list continues to keep the CIO bewildered, irrespective of whether s/he embraces BYOT or not.
From what I recollect, it all started with the iPhone. Then it extended to tablets, laptops, and what have you. Not that earlier personal devices did not connect to the corporate network; they did all that on the wire and then over the air, if you will remember devices with a technology called “activesync”. As the network and technology improved, browser based apps started appearing. Soon enough, the resident app followed.
I don’t recollect all the company provided devices that I have used over the last decade. This would imply that we had a lenient policy even before the BYOT buzz appeared and started haunting every technology professional. The early PDA (which eventually integrated itself into the phone) had limited use, and was not widely prevalent due to its unwieldy size and interface. Except for the early large form factor devices, it was not a statement to make.
Evolution of devices and networks created new possibilities, as the scattered raindrops became a flood. Apps emerged for everything, along power in the hands of the executive; but with no constraints on time. Business impatience became the hallmark of new technology deployments — one that would swamp all available and unavailable time. The CIO built layers of infrastructure, applications and security to manage the demand. It did not matter who or how many used it; if it was possible, then it had to be available.
The democratization of information worried only the CIO until stories of compromise started spreading. Compromise not always by the external world, but bits of information scattered across — slowly fading away with exits and ignorant employees losing devices (or passing hands within the family). Enterprise liability driven by law and governance suddenly found itself at loggerheads with BYOT.
Depending on the country of incorporation and most probably operation, the laws require stringent compliance. BYOT contravenes some with liability creation for not just the CIO but the CEO, and even the global HQ. Recently, I witnessed a cyber law expert thrust the fear of the law of the land to listening CIOs, who cringed with every clause and interpretation of impact to the executives and the enterprise.
So what are the available choices? Will the CEO not want the next new device on the block to be connected to corporate infrastructure? Does s/he not evaluate the ramifications to the enterprise? Is ignorance a good excuse? I believe that the CIO needs to raise the bar with heightened awareness starting with the Board, which then cascades downwards. It takes only a single incident to create collective pain. CIOs can address the contingent liability with reasonable due diligence, control and documentation to dampen down the impact.
It is not going away, but what it means to you is up to you. BYOT = Bring Your Own Trouble, or BYOD = Bring Your Own Demise, or BYOD = Bring Your Own Destiny, or BYOT = Bring Your Own Tension, or BYOT = Bring Your Own Threat, or BYOD/T =? You decide!
The bewilderment was visible to everyone who even glanced at the face; not that too many people were in the room, but everyone could clearly see the expression on the face of the chairman. The trigger was the suggestion that the big ERP that has worked well for almost a decade should be discarded in favor of another one. The animated voice and high throughput beyond the normal diction made it difficult to comprehend the entire story. So I slowed down my friend the CIO of a fast growing enterprise and asked him to begin from, where else, but the beginning.
Over the last year or so there was a rumbling of discontent about the lack of adequate support and the rising cost of licenses and annual support. The problem was brought to the forefront when after a version upgrade necessitated by end of support announcement, the system started behaving abnormally with earlier functioning features now working differently. Stability took a long time to achieve.
On the other side another function was struggling to support the continuously increasing license and support costs. The thought of additional functionality and modules was abandoned upon hearing the new licensing norms. This indeed creates a difficult scenario for the CIO and the CXO to contemplate the future. As the company grows, how to ensure that the efficiencies gained thus far are not lost? How to control the ever increasing burden of Business As Usual (BAU)? The ratios of BAU to new initiatives were in favor but slowly sliding.
So the CIO called his team and started exploring alternatives. Can the already good discounts from the vendor be improved upon? Is it possible to move away from per user license to something better? What if we exclude a section of employees from the technology solution? Would the enterprise technology architecture become complex if multiple solutions were deployed? Would the cloud make any difference to the outflow?
That is how the recommendation came up that the current technology stack be replaced with a competing product which offered (at least on paper) better TCO. And the CIO decided to raise the question with the management which led to the scenario above. The CIO had done his homework by talking to the respective functions and gaining their grudging nods. But the scale of change scared everyone.
We all know that change is not something anyone likes despite whatever pains may be currently plaguing the process, function or enterprise. It takes a lot of effort to even get the idea to gain traction. We discussed the merits and pitfalls of the proposal and agreed that there is no easy way out. The change will be transformational also providing an opportunity to kill a few “this is the way it is done here” kinds of processes. The TCO over the next five years with the projected growth did indeed demonstrate more than 30% reduction.
Reinvigorated, the CIO agreed to push the plan ahead, armed with confidence that he was on the right track and that the change agenda would indeed benefit the enterprise in the long run. Would you do the same if faced with this challenge?
With the economy tightening again and uncertainty across geographies, enterprise spending is once again under focus; this is giving rise to some interesting discussions. Driven by the CFO, CEO, and CIO, who are exploring deferred investments or the usual, ‘doing more with less’, the discussions translate into unrealistic (as griped by vendors) expectations from suppliers, vendors, and partners to provide goods and services at deeper discounts.
The result is rounds of moaning and groaning from either side, citing their versions of reality and pushing the limit beyond the last transaction. The promise of future and making up the deficit in the long term does bend most; a few that do not oblige, are rewarded sometimes, but more often, it is an opportunity lost. The resultant business deals create suspicion if earlier everyone was enjoying margins higher than they should (be getting).
Irrelevance of the printed price
In the IT world, I never heard of anyone paying list price on anything that they bought. In normal times, discount levels used to range from the nominal 10% to in many cases to as high as 70%. It was a rare one time transaction that enjoyed higher numbers. The list price was a marker to decide whose need was higher and who had more patience. Month ends, quarter ends, and year ends provide opportunities offering higher levels of business and discounts. Again, almost everyone recognizes this and plays the game.
In the last slowdown, or recession, depending on which part of the world or which industry you belonged to, a few companies breached 90%. There are anecdotes about free solutions being provided to a few marquee customers either as an entry price or to sustain business. ‘Free’ is a paradigm shift; though the way some vendors are hiking their annual maintenance charges, free does not seem too unreasonable, considering that in 3-5 years you have paid as much as the initial acquisition cost.
So why do vendors continue to print a list price which has irrational numbers and then offer a discount? Maybe to gratify the human nature which revels on a deal? Purchase managers and CIOs work on reducing prices every year. Volume typically adds to the discount but is not the only determinant. Benchmarking across the geographies I find that the level of discount rises from west to the east and then again slides with India and China being the trough. Despite this trend, I haven’t seen a gold rush to shift license contracts from other countries to take advantage.
Renewed focus on IT budgets
The current uncertainty has once again brought budgets into focus. Slowdown in customer-spending is already impacting retail consumption and thereby every industry. Going into budget sessions, the expectation is to once again lower expenses and investments. We still have inflationary trends in many countries and wages are going up for some, while cost of living continues to go up. But the question that haunts me is, if there is indeed so much of buffer that every time the challenge is thrown, people find a way of adjusting to new baselines, then how did the same people allow higher expenses in easier times?
As goes the proverb, “Mother is the necessity of invention”, I believe that with every challenge new opportunities are explored and leveraged on operational efficiency. Technology evolution with new disruptions contributes to improvements; return ratios are however reducing and we are reaching a point where the stretch will reach a break point. We will achieve the pit bottoms sooner than later; the list price will then have to change. Whether it will go up or down is another debate.
The other day I was in a gathering of CIOs being addressed by an eminent editor who was unraveling research conducted by his IT publication. The research surveyed a large number of CIOs who provided their priorities, challenges, opportunities for the year ahead and some numbers (budgets, compensation, and longevity in a role). Based on their frame of reference the audience agreed and disagreed with the data points. This was followed by a discussion on some of the inferences and the qualitative feedback. Then all hell broke loose.
The discussion, like always, touched upon some favorites like business it alignment (BITA), measurement of effectiveness of leaders, and the most debated one, TCO/ROI. Everyone had an opinion on everything and rarely did opinions converge. Some felt that BITA is a non-issue while others still struggle with it; it was opined that the CIO, by virtue of taking on additional business responsibilities and participation in business discussions, has already demonstrated leadership, and TCO/ROI matter to almost everyone except when under the guise of “strategic projects” the issue is sidelined.
The role of the CIO and its evolution from technology to business was justified with the fact that technology evolution and usage patterns within the enterprise have driven newer expectations and thereby the change encountered by the CIO. Alignment need, lack or existence was challenged and treated IT on par with finance and HR or marketing. Contextually, depending on the incumbent CIO and the industry, these are real trends.
Learning from the discussion
Who justifies ROI and who should be tasked with the calculations? Is Post Implementation Review still in vogue? No one had done any and neither did any enterprise go back to review the expectations with the reality. Those who did create business cases with ROI agreed that ROI is now passé. Interestingly a few promulgated that they use the cost of not doing a project and losing on growth, customers or position in the industry. The learning from the discussion could be summed up as follows:
1. BITA is largely dead; it is not about alignment anymore but about working together and solving real business problems. Gap, if any, is the perception that vendors and consultants want to fuel.
2. In the same spirit, ROI or any financial metrics is co-created by the CIO along with the function or business impacted. The justifications focus on incremental revenue or cost savings and are shared between the CIO and the business head.
3. Projects are also being sanctioned with strategic intent focusing on not just the new capability and its impact, but also on the potential disadvantage faced when the capability is missing.
4. The discussion around the table is no longer on the technology, but the impact and outcomes which have to be enumerated using the positive or adverse impact to customers and employees.
5. There will be enterprises that get it and some who don’t. CIOs will jump ship where they remain challenged for too long.
I wonder what is the need to continue berating the role in which we are, the CIO? Can we stop talking about it and get on with IT? Are we creating self-fulfilling prophecies propounding the need for alignment, or the evolution of the CIO role, or at the basic level pondering on how to justify budgets?
We live in uncertain times. Global economies are tumbling randomly, impacting everyone within as well as across borders. Citizens and corporates alike are living with FUD (Fear, Uncertainty and Doubt) as the world watches the unfolding of one crisis after another. With survival at stake, individuals as well as enterprises are taking steps to tide over the current quagmire. In our connected world, the impact is felt even in otherwise stable or developing economies.
Past economic events have left many economies struggling. Is there anything that can be learnt from the past? Recession and the slowdown-driven new normal had everyone focusing on cost and then on incremental growth. Successive events have taken away much of the impact, once again driving enterprises and individuals up the wall. Talks of deep cost cutting are afresh, which now chips at the bones with no flesh remaining.
Not too long ago, I interacted with such a CIO who was asked to find alternative opportunities. I learnt about the trials and tribulations of such a situation, especially when there is a gap between two jobs. The person was a great performer and excelled in creating new technology solutions. In recessionary times, discretionary spending was cut. There were no new projects and thus the pink slip.
In good times, every enterprise leader will cite the often repeated cliché, “people are our best assets”. In difficult times, after everything else has been tried, companies lay off assets that can no longer be deemed useful. Normalization has a way of sometimes impacting productive assets too, with resultant attrition hitting operating efficiencies. Layoffs are a reality, and so is the adverse impact they create.
The ecosystem of friends, peers and close family can help overcome the negative sentiment. Seek a coach or mentor who can keep the sanity levels normalized. Even if you are lucky, it takes time to find what works for you, and the new company wanting to hire your services. A non-CIO friend took almost two years to get his rightful position, while his kids and family supported him emotionally. The CIO was lucky to find a fresh beginning within six months.
What could I have done to prevent this from happening? The mind tries to justify and find causes related to personal behavior, performance or shortfall that might have created the situation. It refuses to recognize external forces, instead, attempts to rationalize self-existence. It takes a while for reality to sink in and start afresh. The self-denial phase can last from a few hours to years. This self-pity mode becomes the most unproductive time. It is important to leave behind the baggage and move on with a fresh start.
What does this mean? Be prepared as Black Swans are becoming more prevalent than NNT (Nassim Nicholas Taleb) postulated. Do not feel disheartened when someone close gets impacted. Support the person in any way that you can. When I faced this situation a long time back, my friends and the IT industry leaders provided adequate cushioning to sustain self-pride. I was fortunate to maintain continuity in my transition, and thankfully overcame emotional distress quickly. That’s when I realized the importance of networking and reputation.
We live in uncertain times.
Recent times have been interesting, to say the least, according to industry news. Angel investments, venture capital, and seed funding have been relatively easy to get by. Every business magazine and newspaper is talking about the young generation choosing the path less trodden. New business ideas appear out of nowhere. Once executed, it makes you wonder why you didn’t think of it, if it were so obvious? These are however the ones that succeed, which I am sure are statistically very small compared to the ones that died prematurely.
The spirit of entrepreneurship seems to be in the air. Faced with a mid-life crisis of unmet aspirations or growth, many are pursuing their dreams of being their own bosses. So I decided to track down a few CIOs who ventured, to find out what triggered their steps towards being an entrepreneur. Some ventured into related industries where they were employed, while a few were totally unrelated to their past employers domain or for that matter IT. What came out was an interesting set of revelations.
Leaving the rat race behind
A CIO, with many years in the pharmaceutical industry, decided to venture into healthcare, and so did another who was in the banking industry. For the former, it was leveraging his business knowledge of the lacunae in the marketplace, while the latter saw an unmet need to address, based on his personal experience.
Both were driven by different stimuli, the common theme was, however, to get off the rat race. Both were good IT professionals, and one would have assumed a journey from mid-sized company to larger enterprises was a logical progression. So when a CIO approached me for advice on when to get started on an entrepreneurial journey, it was an interesting discussion.
We started with his current position, industry and economic impact, and personal growth; all appeared positively stacked in his favor. Then we reviewed his quandary. His role had grown as a CIO, he was respected within his company, and everyone acknowledged his expertise. He knew it would be a difficult task to rise beyond IT, even though he knew the business well. He dreamed of being a CEO, and starting up on his own seemed to be an easy way to get there.
Navigating through the choppy waters
Risks were the economic uncertainty, funding required, and the financial safety that the family needed. Key requirements of an entrepreneur namely the vision, management skills, financial acumen, and marketing abilities were all present. The doubt was about timing, now or later. My advice to him was to take the plunge. There is never a good time like now, analysis will lead to paralysis.
Even in a job, every new venture has a risk element to it. Sometimes we embrace it and sometimes we dither. We call it change management. So why is change difficult? Because we are the cause and the effect; we are responsible for the journey and the outcome. We compete with ourselves and have no other benchmark.
I guess it requires thinking in a different mindset to get off the ground. The chains of comfort will always hold you back. The debate is about when is internal self-reflection, and the answer is now. Do you want to be an entrepreneur? As Charles Kettering, the famous inventor said, “I have never heard of anyone stumbling over anything while he was sitting down.”