One of my CIO friends narrated an interesting anecdote about his meeting with a CEO of a mid-sized IT services company. They were talking about the extension of a contract that had run through three successful years. The CEO was relatively new to the company and not party to the original contract. He was berating that they were losing money on the current deal and needed to turn around the business and the fact that the global HQ was fast losing patience.
Effect of slowdown
The contract was signed at a time when growth was good and business expectations were stratospheric across industries. The then CEO was exploring local expansion as well as captive services for global operations that would have given Indian entity a firm standing. The downturn took everything away including the CEO. Business growth did not revert despite the economy stabilizing. The pressure to turn around the business thus became paramount for this IT company.
As the negotiations stretched over a few days, the CEO began demonstrating discomfort. In an open book costing he was justified in his pricing but unable to acknowledge that the company had built up higher running cost which could do with pruning. As the customer, my CIO friend was unwilling to pay a substantial increase to accommodate. The choice to the vendor was to cut costs in a hurry and acquire new customers, and to the CIO it was about continuity or moving to another vendor.
The negotiation process
Companies set up specialist functions to negotiate deals, sometimes within Finance and at times as an independent charge or within the function equipped with experts who justify their existence with great sounding deals. Some of these may be win-win, but many end up bickering over legal contract terms or lose-lose unless you are an 800 pound gorilla whom nobody can ignore. So how does one define the limit for negotiation? How do we know that the deal is great for both of us and not a win-lose or lose-win?
Conventional way is to negotiate hard, drive a bargain that is best value for the customer. It does not matter if the supplier makes money or not; they can always recoup their margin in the next deal or with other customers. This belief has survived and done well for many. Suppliers recognize it and so do customers who play the game. The industry has adjusted prices accordingly so that nothing sells for full price anymore. Everything has percentage off going all the way to 90%. Can we get it free?
The dance of the discounts?
There is a need to change some of these paradigms to bring the dance of the discount to a stop or at least reduce it to realistic levels, may be linked to volume of business. CIOs too need to set fair expectations internally and externally to create win-win scenarios and work upon long-term relationship building. Rarely any deal now is tactical. It is also important to remember that people churn across companies. The spurned, scorned or bitter salesperson may turn up a few years later in another company which is critical to your business operations.
People buy from people, so don’t squeeze the lemon too hard, you may end up with a bitter taste.
P.S. my CIO friend concluded the contract with the vendor who did reduce his overhead costs.
Over the weekend while I sat reading some emails and my commitment towards writing Oh I See!, a 4-year old walked by and curiously observed my activities, uninterested she moved on. An hour later, once again she found me transfixed at the same spot. This time she queried the nature of my busyness. I replied that I was working. “What are you working on? Do you have homework? If you did not do your homework, your teacher will punish you?”
The illusive free time
What is the incentive for any CXO to invest his/ her spare time towards anything related to work? Do organizations really expect 24X7 attention? The portable computer was just the beginning, the tablet is not the end; increased connectivity driven by technology advances in telecom coupled with mobile-enabled work processes as well as applications leave few areas unexplored. But these are optional to some extent and do not impact everyone in the same way. Reality is that work expands to fill all the time like traffic expands to take up available bandwidth in a network. Are you doing what matters?
So is there a way out? Different strategies work for different people. Some take the discretionary route to carefully decide what occupies their precious time. It could be reading newsletters, industry research, business magazines or management books, or just the general newspapers, fiction; and other categories like travel also find their place. It is the discipline that keeps them going. The time thus spent is invested in gaining perspectives or insights that could help in various walks of life. The remaining choose to stay away from such mundane activities.
The dying habit of reading
While I make a general observation from my limited span of friends, colleagues and acquaintances I have interacted with, the fact is that reading as a habit or investment is waning. Most IT professionals slog to acquire various degrees and certifications, but stop short of expanding horizons. This is despite the fact that it is a lot easier to find information in all forms, print or digital. Reasons and excuses revolve around paucity of time, to work pressures to just plain inertia.
Last week I happened to be in a panel discussion with some CIOs who were expected to debate on ‘Improving Enterprise Efficiency’. The sponsor’s management personnel on the table listened attentively and sometimes also asked intelligent questions to the CIOs. The expert moderator balanced the discussions well, jumping from one to another, thus keeping everyone engaged. Unfortunately, the enticing headline inevitably focused on server virtualization, private cloud, and VDI as the key themes.
How do you create a link between responsive IT systems, enterprise efficiency, and business IT alignment (BITA)? The question had everyone stumped and the answer emerged as the lack of responsive systems would imply time wasted by the employees; thus, response times are important to efficiency. Intuitive and elementary; so what is the debate?
Taking another element of research over the last decade on significant portion (estimates vary from 50% to 90%) of IT operating expense is expended on maintaining the lights on or business as usual. So reducing this piece of the pie will presumably shift the budget towards innovation and not as savings. This shift of expense to investment if prudent and allocated to virtualized servers will improve the efficiency of the enterprise. And we will all live happily ever after!
If two unrelated pieces of research can be correlated through some magical process or non-empirical derivation, then as suggested by the Chaos theory, anything can influence the outcome of what the IT organization creates, manages, or improves upon. It could be sunspots, or a butterfly in eastern Asia, or global warming that might provide insights.
The above is just a sample; simplistic evaluation models defined to justify generic technology investment have almost become the norm. Even when the specific context may not apply, the push to sell is discomforting and creates an auto pushback. Confused, the CIOs have been struggling to divert the discussion to their technology team which is better equipped to discuss alternatives and how they align to enterprise architecture.
The elasticity of hypothesis amuses and at the same time frustrates. Nowadays the headline proposed at any event or by a consultant or vendor speaker has rarely any connect with the subject. The stretch of imagination belies conventional and sometimes unconventional wisdom. However, despite repeated occurrences, the bait still works in getting CIOs excited to come and participate.
The elasticity expected from the CIO goes against the business aligned IT leader with a dialogue that is expected to straddle server provisioning or data center cooling to improving customer service with process redesign using video analytics, or complex transport management. The diversity of expertise with deep levels of understanding creates a superman like persona who is discussing code optimization with the programmers and engaging the board on shareholder value.
The latter is still rationale and achievable with some hard work, some help and coaching, but the former in which unconnected factoids create an opportunity for specific technology breaks the rubber band.
The meeting finished with agreement on clear responsibilities, time lines and the next scheduled meeting date four weeks away. The minutes circulated to the team the next day captured this very well. Like all projects, this one was thus far on track though the next three months were critical. The requirement gathering had gone well and the first cut was delivered on time. Everyone seemed geared to take on the challenge and another successful project delivered.
Over the next few weeks, some updates were received on the portal, a couple of emails and then none. I began to wonder, getting anxious, if everything was okay with the project. So a reminder was sent to the group asking for updates; received one response, silence from others. With just one week remaining for the next meeting, and progress report depicting inconsistent updates, acidity levels started rising on the real progress.
So I started calling folks and walking across to their workstations to figure out what gives? Some titbits:
“Yes, I have completed the tasks, but was too busy to provide an update.”
“You should have the status by the end of the day.”
“Why are you getting on my back? By the time we get to the meeting, we will be on track.”
“Sorry, something urgent came up, so I am a bit behind schedule.”
All this made me wonder, here we are in the midst of an important project that has Board visibility, will provide a significant benefit, everyone vied to be on the project due to the positive impact; but they do not find time to provide an update! What causes such behavior? Why do some people find it difficult to provide open and clear communication on agreed milestones or request for information? Why is follow up necessary?
With multiple priorities and fires that need to be doused, short-term dementia is pervasive. Rarely the lack of response is out of disrespect, disregard, or plain indifference. Follow-up is essential to bring the issue at hand to attention, to reinforce the signal of ownership and shared responsibility. It also helps to bring back focus to what matters.
Having said this, there could be instances of no response where connect is not adequately strong or in some cases due to missing shared accountability. Another factor that contributes to silence is the fear of conflict. This occurs when the issue and people are inseparable. Culturally, many are unable to provide bad news and thus prefer not to respond. In all these cases, the leader has to intervene and create the way forward.
IT organizations suffer the most when following up with diverse groups—internal and external. When working on cross-functional projects or while solving problems that require different technologies to work together, it is important for IT leaders to inculcate missionary discipline within the team to ensure that the initiatives in which IT participates, there is clear communication to all stakeholders.
Someone summed it up well “If I did not have to follow-up, I would save half my day”.
Recent past has seen many young IT professionals make the grade and move up the hierarchy to take on the responsibility of IT head, some also getting the coveted title of the CIO. For those who made the cut within the same company, it was newfound responsibility with new peers willing to guide through the maze. The rest in new positions in new companies charting unknown waters, every swell appeared to trigger emotions of “Titanic” proportions.
One such new CIO gingerly approached for help, tips, advice, anything to help navigate shark and pirate infested courses. Going down memory lane (it was a long lane) trying to collate the thoughts across each early success and challenge, the gushing emotions had to be controlled to provide coherent thought. So we agreed to meet again and mine the memories for actionable insights that can be specifically applied and get some general good practices (almost like doing business intelligence, can we call this Mental Intelligence).
Is there a checklist or step-by-step approach that can be used by a new IT leader to gain success ? The answer is yes and no. Yes because there is indeed a framework that helps get started irrespective of variations across different industries or size of company; no because it is not cast in stone and needs to be adapted to the context determined by corporate culture, politics, and industry and company growth. But something is better than nothing. So here is a set of guiding principles; the list is not exhaustive due to space constraints.
Listen. Understand the business, the technology, the rationale behind the decisions taken, the people involved. Take notes and validate them to ensure you have the facts captured accurately.
Observe. People dynamics is important to success. See how your peers and other heads interact and behave with each other. It gives you perspectives on key influencers and roadblocks.
Ask questions. Everyone loves giving away knowledge to the “ignorant”; clarify your doubts and seek to unearth the assumptions if you are in a new industry. Gather finer nuances that make your company different.
Bond. Not just with your team, but also across other peers and across management layers. Be approachable and yet confident of your capability that has got you here so far.
Communicate. When you speak (a people language), do it in a way that you connect with others and they are able to understand you. Whether it is good or bad news, focus on the issue, not personalities.
Manage expectations. As the newbie expectations will be high or none with most somewhere in between. Set realistic expectations, sometimes stretch, but never over-promise.
Always meet people. Don’t wait for a problem, issue or project to meet that is transactional and does not build relations. Have a coffee with as many people as often as possible, including vendors.
Finally if you get stuck, seek help from other CIOs or even your boss. Good performers need coaches too.
The Chairman of the Indian entity of a leading global IT vendor company addressing a gathering of CIOs stressed on the (now so obvious) fact that CIOs should speak in business language. Everyone in the audience agreed and appreciated this repetition like the fact that “the sun rises in the east”. The senior statesman then went on to present a dozen slides on why virtualization and consolidation should be on the CIO agenda.
A group of CIOs visited an international event hoping to learn from interactions with their global peers and gain different perspectives. While the IT vendor companies represented in the event were somewhat similar considering the global nature of the IT industry, the speakers were different providing a local flavor of the country. Majority of the sessions stressed on the same fact “the sun rises in the east”, I mean, “CIOs need to speak the language of the business”. They, however, presented in complex detail the technology solutions that they wanted the CIOs to buy.
Excuse me? Did we (the CIOs) miss something? No, we did not doze off during the presentation and neither did we see you skip some slides in your presentation which may have connected to the obvious fact. We were attentive and so was everyone until the tech stuff started. There were many messenger, text, and email messages flying in the room to check that we were all in hearing the same thing. Excusez-moi or should I say Entschuldigen Sie, maybe if you like I can try another language. But where is the connection? How many of the CIOs in the room were part of your sample size?
Over the years, IT was nudged, pushed and coerced to discard techno-speak in favor of what everyone else speaks in the enterprise; the quick compliance and transition surprised many and helped bridge the perception about individual and team capability. Projects were no longer about the next big technology or the latest versions of the fancy devices, they embodied holistic discussions around internal process and external customers. On the other hand for some reason the industry refuses to acknowledge the change continuing to cite examples of a shrinking minority of change averse IT leaders.
So how can this perception be changed? How do CIOs ensure that what they say is what the IT vendors and consultants hear? I believe that it is time to start challenging the well-wishing speakers to cite examples when they talk about the language course CIOs need and not hide behind the global research reports of named companies to justify their spiel. Can they speak more from personal experience? For them to be heard, maybe they need to talk business, unless this is a ploy to hide their inability to speak the new language of the CIO.
For the CIO, the sun indeed rises in the east, but maybe, just maybe, it needs to rise from the west for the vendors and consultants to notice that the CIO has passed the language course with flying colors. Maybe, it is the vendors and consultants, who need the course after all!
Over the years, the businesses’ dependence on IT has grown to reach a state that it is unimaginable to think of any business running without IT. I am sure that we can start creating a list of exceptions which may be different by geography or economic classification, but predominantly every business operation uses IT to sustain, grow, diversify, improve, analyze, and a lot more.
Over the years, the IT head has also transformed through the journey, working lockstep with the demands of the organization, providing the necessary solutions, sometimes wildly successful and sometimes challenged, delayed, or unsuccessful. Through the era, the IT leader kept moving outward from the glasshouse to the factory, warehouse, corporate office, and field and wherever the internal customer was present, and then beyond to where the external customer lived.
Over the years, as the transition occurred to the CIO, the discussion changed from the nuts and bolts, three-letter acronyms, servers, routers, hardware, software, networking, to business process, order to cash, procure to pay, customer analytics, increasing revenue, strengthening the bottom line, creating competitive differentiation, managing supply chains, collaboration with the suppliers and customers, new business opportunities, until the difference with other CXOs started blurring.
Over the years, one characteristic that has not changed is the acceptance of demands ― reasonable or otherwise, requirements ― rational or not, time pressure to deliver ― urgent or not, budget cuts ― downturn or not, accepting everything business desired, spoke about, or demanded. The IT function was expected to stay subservient to cajoling, coercion, ransom, threats, with the proverbial sword hanging inches from the neck; if you cannot do it, we will find ways outside to get it done a la shadow IT.
IT teams were not expected to challenge, they were expected to deliver; whether it is a report that no one sees, a quick fix that stays in UAT for weeks beyond the deadline, systems that saw usage drop faster than the stock market in the downturn, one liners or vague or assumptive requirement definitions, or in recent times, consumer devices to be connected to corporate networks. A challenge or denied service was sacrilegious and a pile of turn-downs could lead to “lack of alignment” to what business wants.
With increasing comfort with business, conviction, and communication, CIOs have looked the other in the eye and engage in a non-confrontational debate which has germinated into acceptance of the CIO viewpoint and its intent only to the best interest of the enterprise. It’s a newly discovered facet that boosts confidence and fuels itself; the spark is now traveling virulently. CIOs have created the freedom to say “No” to the unreasonable and ill-defined.
It was a panel discussion. The headline for the discussion said, “Business transformation”. The participants were CIOs across different consumer facing service industries, the audience, a mix of 80 odd CIOs wanting to take away some pearls of wisdom from the collective experience of over 100 years on stage; after all not too often you get to hear success stories on how business has been transformed by CIOs with a mix of people, process and technology.
It started off well; demonstrating the rich experience of the moderator who put across some sharp questions to the CIOs. Into the discussion, a couple of service incidents specific to their companies had the CIOs on the defensive in an attempt to rationalize what appeared to be process lapses. Few from the audience joined the charge and soon it appeared to be a “Consumer redressal forum” with the hapless CIOs on the dais unable to defend and afraid to rebut the moderator.
A brave soul from the audience chastised the moderator for diverting from the core subject and the personal affront to the CIOs. Sensing trouble, the organizers closed the discussion citing time constraints.
Real business issues
Later in the day, a debate set off between a few panellists and a bunch of CIOs on whether CIOs can influence service outcomes in the call center, field service, or responses received by the customers. Service exceptions are reality despite the best intentions and efforts of the enterprise. With attrition being sky high in service functions, training time has been shrinking with on the job training becoming a norm for some.
Even when process and technology has been engineered for effectiveness, the people challenge remains. So what options exist for an enterprise and what can the CIO do to create a consistent framework that the enterprise can depend to provide consistent, scalable process driven service outcomes across geographies? Is there a best practice that can help to reduce the customer pain?
A changing paradigm
Products entice a first time buy, but services create repeat customers. Irrespective of how the service is delivered, via call center, on premise break-fix, or at service center, it is important to set expectations and manage customer interaction with empathy. Sears coined the “Customer is always right” paradigm; in the current hyper competitive world and unreasonable expectations, the customer has the ability to take her business away to competition.
Enterprises need to stay connected to the customer via all channels seeking and listening to feedback that is out in the social media. It is a space to watch not just what they are saying about your company, but also competitors. I believe that every CXO including the CIO should stay aware of the pulse of the services and continuously improve on the experience with a feedback loop. After all your customers can be your best sales persons and success (or an irate customer) is only 140 characters away.
Once upon a time (actually not too long ago) a company and its audit firm lost their marbles indulging in innovative accounting and logic belying practices. The event resulted in the former shutting down and the latter being dismantled. Hapless citizens and investors who put their faith in these lost their financial safety nets and were left poorer. The aftershocks felt by the rest of the companies created an industry around consulting services. SOX became a bad word for all CXOs and everyone dreaded facing audits. Compliance gained prominence and everything else was subservient to it.
IT being the foundation of processes and information enabling the enterprise came under the scanner; it was not enough to demonstrate that data integrity and consistency is maintained, it was also important to provide evidence that others in the organization did not violate process that could result in potential loss of control. Thus as the custodian of the physical information assets and the administrator of the logical processes, the IT organization had to fend off auditors of all types at unnerving frequencies.
The FUD factor
Consultants thrived on FUD (Fear, Uncertainty, and Doubt) factor as non-compliance had severe ramifications for the CIO, CFO, COO, and the CEO. Perceptions of risk heightened the tension as any risk classified as high needed immediate attention. Tolerance levels of Boards tended to zero and Risk Committees hounded the functional heads to comply by the written word, who, in turn, turned to the CIO to address the sane and inane collectively.
Whether it is internal, statutory, or third party audit, the basic intent is to review process execution consistently against good practice and compliance to stated policy. Additional frameworks on quality, process maturity, security, and others provide the enterprise incremental value over competitors. Policy, once stated, requires alignment with the real world to ensure relevance; thus, periodic review is critical. When regulatory restrictions impose process change(s) like in case of SOX or PCI-DSS or HIPAA, the enterprise has a limited choice but to comply. Some industries are more regulated than others; some companies pride themselves on their GRC frameworks, the rest follow the path of least resistance.
Options for CIOs
So what are the strategies the CIO can adopt to ensure that s/he does not get beaten up at every audit? CIOs should partner with their Internal Audit teams to work with each functional head and process owner to review and validate not just the process, but also the management of exceptions. If Internal Audit is unable to provide the necessary attention, seek external help; but do not ignore it. S/he should create clear accountability and transparency of every task across the cross-functional teams involved in the execution. It is important to note that people are the weakest link of any process discipline. Internal process champions or BPM experts are invaluable in the quest towards excellence.
Compliance is non-negotiable; our shareholders and regulators expect every part of the enterprise to conform to the laid down policies and principles. Good corporate governance expects no exceptions; despite all the controls we still come across black swans that disrupt the equilibrium and raise the difficulty level. Unfortunately, the enterprise CXOs and the CIO have no choice but to run faster to stay in the same place.
The CFO has traditionally controlled the purse strings ensuring fiscal prudence to keep the enterprise healthy, with adequate financial safety net. As a part of the management team, the discussion and debate ensured that investments stayed aligned to overall company direction. With adequate risk controls, only in rarest of rare cases, the CFO could overrule other CXOs. Recent times have been full of analysis and news that the CIO is no longer in control of the IT budget, now the CFO purportedly controls IT investment decisions.
The CIO being the youngest CXO, not always by age but by role, has evolved only in the last decade or so. Having typically grown from a technology background, he was perceived to lack business acumen and unable to take all aspects into account. The majority migrated and matured with ease, working lockstep with other CXOs, to the benefit of the enterprise.
Post slowdown, “new normal” changed organizational risk appetite; and with finances being scarce, the CFO rose to prominence. Now with growth back on track, why is it that the CIO continues to stay shadowed considering s/he demonstrated higher changeability and adaptation to the environment?
IT budgets have stayed stable over the years; with mature enterprises focusing on bringing down IT operating expense, leaving the capital investments open for discussion. Corporate and IT governance provided the necessary checks and balances on where to invest. So what gives rise to the new paradigm? Does it indicate breakdown of the balance or has the CIO relinquished his/her responsibility now satisfied to stay in the back office? Has the foundation and partnership set by IT crumbled with cost remaining the residual reality with the value being discarded on the wayside?
The cost-benefit debate
IT does incur cost; everyone is aware and acknowledges that a significant portion (40-90% depending on the enterprise, IT maturity, CIO, Board of Directors, etc.) of the budget is allocated to “business as usual”. Where the IT organization and its leader is unable to clearly communicate the benefits or have a dialogue with other CXOs as an equal, irrespective of the good work done, IT gets labeled as a cost thereby nullifying the efforts.
IT also delivers value to the enterprise, customers, employees and the shareholders. Sustained differentiation and competitive advantage in the near term are typically IT enabled innovation. Multiple industry IT and CIO awards, and case studies validate success clearly illustrating value. New disruptions created by mobile consumers, social online engagement, analytics, and many more would find it difficult to survive without a good IT platform and sustained focus. Is the balance shifting?
I believe that recent times have accentuated the value of IT and have created a wider role for the CIO that goes beyond technology lead interventions. Outsourcing the operational activities has also given the IT team an opportunity to focus on what matters. The task of managing the budgets and reporting has become even more important thus creating a stronger bond between the CIO and CFO. With increasing financial acumen, the CIO and CFO are on the same side of the table with the CIO deferring the financial decisions to the CFO. This is re-balancing the equation and not a shift.