Considering that almost everyone is at some stage of the next year’s budgeting process, ROI has been dominating mindshare. Amongst these were two discussions around return on Business Intelligence and return on Disaster Recovery. Both are fairly nebulous in their manifestation, and difficult to put a fix on the number that can satisfy the CXOs — especially the CFO and the CEO.
Business Intelligence is a discipline that suffers from detachment from its real users and owners, largely due to the technology’s complexity. Thinking beyond conventional reports to analytics is a leap of faith, and the enterprise’s ability to formulate and use trends and associations that are atypical. In the flurry of operational activity, discretionary time is a luxury that many can ill-afford. Thus, most organizations end up with expensive automated reports which serve the same purpose that ERP reports did earlier.
Disaster is something that strikes others; so why put aside significant investments, time and effort that could be used to create new capacity or build additional capability? With a few exceptions, almost everyone has a disaster recovery plan on paper — nominally funded, rarely tested end-to-end, and seen as an item necessary to pacify the statutory auditors. Should an untoward incident strike, the ability to retain continuity of business would not withstand the rigor of time and process.
In both cases, continued budgetary support is seen as cost and not as an investment. The discussion on ROI is thus fraught with danger — avoided by the CIO, challenged by the CFO and others. Is there a way out of this predicament? Definitely yes, but it requires the CIO to approach the discussion a bit differently — maybe play a difficult hand; conventional dialogue will not change the outcome.
One track that some have used is to debate the absence of these solutions — what it implies and the associated risks. Absence of BI may probably not be treated with the respect it should, as transactional reports are also possible from the ERP systems and the belief that everything else can be done in a spreadsheet. So a BI discussion has to be guided towards the benefit to different stakeholders and possibly transferring ownership to one of the business CXOs. IT should not be the driving force and implicit owner. After all, the starting point of BI is B-business.
The absence argument has better traction with DR; with the primary systems being out for a period of time, the impact with varying degrees will be felt by everyone, irrespective of industry segment. The time to recovery will decide the type of DR option to be executed. DR is also synonymous with insurance. No one wants to die, but almost everyone buys insurance. So if the data center were to pop it, DR does step in and take over (hopefully, and that is where the discussion went awry).
Are there any models that can be universally applied to formulate ROI on BI and DR? Unfortunately, even those that exist (perpetrated by vendors or consultants) are being challenged to shorten the payback period. Innovation is pronounced after success is evident — else the debate will get ugly. We all know that “insurance promising ROI” is not insurance, we are paying more than we should.
It is a general belief that CIOs are a pampered lot, with every vendor equipped with a marketing budget vying for time of the CIO — wining and dining them, or taking them to exotic locales under the aegis of a larger event organized by, say an IT publication. A destination’s lure or the fine dining opportunity is what the vendors believe attracts their audience to accept these invitations.
Now, the CIO is usually attracted by headlines promising to transform the business, strategies to enhance business value, getting ahead of competition or additions to the corporate bottom line, to just name a few juicy titles. It does not matter what product or service the IT company offers — the titles are very similar in their stated intent to help the CIO in being a winner. Expectation mismatch?
The reality is more on the lines of a captive audience, subjected to what can be described as Auschwitz style torture by presenting presumptuous facts of a micro-segmented market that has no correlation to the reality (of the audience). They then propose the same old solutions around data centers, storage and server virtualization, wrapped on cloud computing enabling the business statements using logic defying rationale.
Recent times have seen the gas chamber (read conference room) pumped with cloudy trends and solutions suffocating CIO prisoners and adding to the confusion. The CIOs’ silent cries are lost in the din of the collar-mike-d speaker who avoids eye contact with the victims, so as to not be cursed by their souls. Sighs escaping occasionally are drowned by the amplified voice of the person standing a head above the rest (on the stage). Basic decency and courtesy prevents the CIOs from walking out; a few regularly pass out, even as their snoring disturbs those who seek solace.
This cycle repeats endlessly, with the CIOs hoping in vain that IT vendors have probably taken their last feedback. That they have changed their way of using the precious face time with a group of decision makers. But no, it is as if the basic principles of customer engagement have been thrown to the winds. Forget the customer or his needs, sell what you have; it does not matter whether the customer needs it or not. Twist the message adequately to make the square peg fit into a round hole.
The vendors’ defense is typically on the lines of, “Listen to the customer? How can I do that when I have only 45 minutes of stage time? I have to tell them my story (the story that my company wants to propagate). I will read the slides, take a few minutes longer than the allotted time, so that there is no time for questions”. After all, I have spent some hard money to sponsor the event.
Over the last year or so, many CIOs have started excusing themselves from these excursions and invitations, in many cases at the last minute, citing business exigencies. This number is growing, and such opportunities will just wither away — unless the model changes to encompass “Engagement, Listening, and Empathy”.
Is anyone listening?
IT budgets were never a great discussion; the CIO struggled to find the right balance between “Business As Usual”, or keeping the lights on, IT infrastructure, incremental innovation, new projects that business wanted, initiatives that IT wanted, and some that the CIO believed will have a transformational impact on the company. Over a period of time, the operating expense ran out of control — to reach almost 90% of the total. Across the industry, this required a conscious effort to bring back the innovation budgets — with BAU settling around 70%.
In the recent past (at least the last two years that is vivid in my memory), almost every IT solution, vendor, consultant, and CIO has promoted the idea of shifting capital investment to operating expense. Capital investments almost withered away, as the economic challenges dictated cash flow controls. Large initiatives found it difficult to get initial funding. IT companies turned around models to offer almost everything as a service, thus obviating the need for capital expenses. New business models liked payments to outcomes spread over a period.
The operating expense model helped forward movement; in success based engagements, everyone was a winner. For the CFO or the CIO, in the absence of success, it was easy to pull the plug, and stop loss. Yes, there was, and is, an inherent risk of the project or initiative not working, but we have not heard of any such anecdotes as yet — as if success rates now equaled the past’s failure rates. Is this due to the fact that the financial risk is now shared in a different proportion between the stakeholders? Or is there another angle to it?
The answer is probably affirmative when it comes to the shared financial risk. However, I also believe that the vendors now prefer the OPEX model, as it helps their profitability over the long term — with continued revenues and the ability to spread their capital investments over a set of customers. The customer is probably paying more over the useful life of the product.
There is another angle as well. Once any process operates over a shared IT infrastructure, application, or solution, with the data too being stored in the service providers premises (sounds like the Cloud?), the ability to get out of such an arrangement into an independent model will be a huge, if not insurmountable, challenge. Everyone recognizes it, and believes that the changeover is executable, but I would be worried to be in a situation where I could be held to ransom — despite what the lawyers tell me.
I am not propagating the message that we all need to move back to the good/bad old days of big capital expenses. The CIO should be wary of the “too good to be true” deals, and safeguard the enterprise’s interests by reviewing alternatives to disruption of services, or the possibility of a shift should the service levels fall below acceptable limits; and in the worst case scenario, the service provider increasing the fee to abnormal levels. The time and cost of any change in this situation can be very high indeed.
Last week, I was at a round table discussion organized by one of the big IT vendors which focused on “Virtual Desktop Infrastructure”, amongst other things. A gathering of about 15 CIOs was invited to explore the adoption of desktop virtualization — its associated merits, challenges and opportunities. It was an opportunity to engage, that once again failed to engage the IT leaders.
The group had a fair representation across industries from manufacturing, banking, insurance, retail, IT enabled services, and some more. The agenda was fairly simple, with the expectation to understand how different industry segments view VDI and what has been the journey thus far. Of course, it was about market sizing and qualifying leads that could result in some business from the vendor’s perspective.
Discussions started off with differing perspectives on filters that every CIO applied to their business operations to determine the suitability of desktop virtualization in their environment. Some amongst them included the kind of work undertaken (task, analytics, office automation, and graphics intensive work), volume of desktops per location, type of applications used, and not the least, ROI on such an initiative. In the same breath, challenges were also debated listing cost and resilience of connectivity (specifically in the Indian context), licensing impact, cultural issues, and again ROI.
Within some time, it was evident that the vendor and CIOs were talking different languages; the former talking about the technological innovation, and the latter focusing on business benefit. With no translator or moderator, the two conversations found it tough to converge on common ground. Thus, the anchor closed the discussion after about 90 odd minutes — with some CIO doodles labeling VDI as vendor driven initiatives or very dumb idea!
Post panel networking had an interesting insight shared by the vendor CEO with the anchor; the CIOs today are not willing to discuss technology anymore. This is making the task of selling to them a lot more difficult as compared to what it was. For sales persons to get into the customers’ shoes and then have a discussion requires different skill sets than currently available.
My rebuttal to that is “Mr IT Vendor, what else did you expect from the CIOs?” Over the last decade, expectation levels from the CIO have shifted from a technology advisor to a business advisor. CIOs have seized this opportunity (not challenge) and many have gone over the tipping point to take on incremental roles in business. To expect this level of discussion from the same vendors who always have “IT business alignment” as one of the top 3 priorities reflects that they too need to embrace the same change that they have been preaching so far.
The IT vendor evolution is a paradigm that I think CIOs have to start contributing to — else they will continue to be at the receiving end of inane discussions and presentations around technology — not winning with the business. Get started and do your good deed of the day, so that the next CIO they meet will not go through the same pain.
Mobile data services brought about email as the first (and probably still the biggest) killer application on the mobile. This is the opportunity that created Blackberry and its many competitors; almost all focusing on creating a better email experience for the corporate user.
Browsing was at best a chore with the small screen, and unwieldy websites struggled to fit on to the small screens. Corporate IT and the CIO were, and continue to be under pressure to enable business processes on the same handset that earlier provided email.
The same users demanded their personal emails on the handset — that expanded the market to consumers, albeit in a small way, until iPhone came to the party and changed the smartphone market. Consumerization of IT ensured that corporate suits wanted the iPhone, while a large segment of consumers (who were earlier fringe data users) became a large force. This created an industry around micro-applications that did inane stuff at times, but mostly enabled the smartphone user with earlier unimaginable capabilities. Competing platforms played catch, while zillions of applications sought favor — spanning across categories like utilities, travel, education, entertainment, productivity, and finance.
IT organizations on the other hand, continued to work on large projects with reducing timelines and budgets. Enterprises using and deploying monolithic applications have advertently compared the facile microapps with the clunky screen-based complex navigation to conduct business operations. Small applications made their way to corporate phones, largely enabling road warriors and pushing information to the real-time executive — not that it changed business decisions in a big way. Sales force enablement was the quick (and in many cases the only) derived win. Another disruption arrived with the tablet demanding attention with better capabilities than the phone.
It is evident that the era of large applications as the primary interface to business process is on the wane. IT is expected to create mobile enabled micro-process automation. Its starting point may be on the fringes with quick tactical workflow approvals, graduating to complex processes on tablets. CIOs should be exploring options that are able to use the existing infrastructure with microapps.
With multiple competing mobile operating environments, transportability of applications will remain a challenge in the mid-term, but that should not restrict attempts. The multitude of form factors and devices that a corporate user now possesses, also poses a conflict of choice. Scan the various app stores, and endeavor to find a set of applications that may find favor within the enterprise. Security will of course remain a red flag as this trend gains momentum. So the CIO has to work with other CXOs to define “acceptable risk”.
In a few weeks, It will be that time of the year when everyone starts creating lists — of priorities, challenges, opportunities (which hopefully also get budgets allocated), new technologies, and so on. Everyone from analysts, researchers, academics, CEOs, CIOs, publications and anyone who has an opinion contribute to the increasing top three, five, ten (or in some cases a random number) based on their comfort of things that are a must do, must watch for, avoid, don’t even think about it, failures, every possible happening, news, people, the list is endless. I am tired …
A lot of these are thought up while on the keyboard, some have inane research to justify, a few are meaningful too. CIOs and IT folks love these, and watch them like religion. Or hate and ignore them because the lists only add to the existing chaos. Adding to these is a set that creates lists for internal and/or external consumption.
Over the years, I tracked lists from major IT research houses and publishing companies to ascertain their alignment with what I planned to do. Like with every list (and that applies to horoscopes too), I found that the alignment varied from 10% to 80%. If you put together a list of current buzzwords, hype curve technologies, magic quadrants, waves, or similar research, you are bound to get a few that will resonate with the personal and corporate agenda.
Now the differences are always explained in context of industry, geography, size of company, maturity in the IT adoption curve; you could also include sun spots, solar or lunar eclipses, global warming, or any other metrics that you can think of. So why does everyone continue to invest significant resources, time and manpower towards the creation of such lists? My belief is that they need to pin up something on their (and others) soft boards, put in presentations, or just publish them for others to marvel at.
Reality is that the lists created by surveys and research are self-fulfilling, based on the asked questions. If a list (of say 10 items) is presented and the respondents are asked to prioritize them, that’s what you will get. Rarely does anyone ask for respondents to fill in 10 blank rows with what their priorities may be. That would be chaotic and statistically not tenable in a report, but would make interesting reading.
So here is my list of lists that I do not wish to see in 2011.
1. Top 3,5,10 priorities/opportunities for the CIO/IT organization
2. Top 10 technologies to watch out for
3. Top (pick a number) business priorities/challenges
4. Top (pick a number) challenges for the CIO/IT organization
If you have any others, do put in your comments. If you love the lists, enjoy them, or if you are cynical of them, join the party. However, if you are indifferent about these and have achieved a nirvana state, can I enroll as your student?
A long time back during a budget meeting, one of my CEOs narrated a story (or maybe a fable) on Boardroom discussions on budgets. This story has stayed with me for a long time, and the memory was refreshed last week in a discussion with some industry leaders. Here’s the story:
In the Board meeting of a large and successful company with multiple manufacturing plants, two agenda items were tabled; first to discuss $400 million investment in a new manufacturing facility, and the second the layout including employee amenities of the same manufacturing plant. The second agenda item was unusual for the board to discuss, but found its way into the chambers since the Employee Satisfaction Index at one of the older plants was low. The financial proposal was tabled by the Head of Manufacturing, with added guidance from the CFO. The resolution was passed unanimously, and done with, in about half an hour.
However, the discussion on amenities took almost two hours — with the longest time spent on the location, structure and type of the bicycle stand. Everyone had an opinion, and disagreements continued until the Chairman of the Board decided to put the debate at rest by appointing a committee headed by the HR Head to review other plants (including those of competitors) and table the recommendations in the next meeting.
Last week, the meeting with fellow CIOs and a few marketing heads veered towards budgeting and ROI. Snide remarks aside, the debate on how these distinct functions justify their million dollar proposals took an interesting turn. When the CIO presents a business case for an enterprise wide system that potentially benefits everyone but requires significant participation and change, it takes immense effort and documentation — in order to get everyone to listen, review and agree. Multiple iterations are the norm, and a chain of signatures essential before the grant of even a tentative approval. Whereas, the CMO sails through in a jiffy citing brand building, customer touch and impact on sales, even when most of them are not necessarily attributable to the discussed campaign or idea.
Why is it so difficult for CIOs to get funding for new projects as compared to, say CMOs? The difference is, I would guess in many parts. To begin with, the language in which these proposals are put across. Another is the change that IT purports to create in a change-averse world. It could also be that marketing as a function always focuses on the end customer, while IT initiatives are predominantly inward focused (though that is changing fast now). The conversation initiated by CIOs when they connect to stakeholders and customers does find traction. So maybe peer learning has to be gained on how to pitch right the first time, every time, and win when every function is competing for the same precious resources.
Scott Adams (of Dilbert fame) in his unique manner put across the marketing formula, “It’s just liquor and guessing”. I have yet to find a good enough one on IT budgeting.
There is an old Hindi song “The peacock danced in the jungle, who saw it ?”; no one is the wise answer. Now what has this got to do with the CIO and the IT organization ? A lot !
IT is one of those functions whose absence is felt a lot more than its presence. Whether it is a simple email or internet access outage or the impact felt on the enterprise users when billing fails, or an invoice does not get created or printed. The ripples across the organization can be heard louder than the thunder on a wild stormy and rainy day. And what about small incremental development or changes that IT delivers everyday helping the business do some activity or task better, faster, cheaper, more efficiently ? Do these get to the eye (or ear) of the management teams ?
CIOs and IT organizations do a good job of communicating big project kick-offs with a lot of fanfare; the project plans and progress is tracked on some dashboard or report at regular frequencies. They are discussed in management review meetings and focus on timeliness or budget depending on the progress report. User and IT teams debate functionality within the review and steering committee meetings which typically see senior management participation wane as the project progresses. Other priorities take precedence and the resolution of conflicts or issues is left to the project team comprising of a few IT folks, vendor representatives and middle management users present as they are nominated to the project.
If all goes well even with some timeline or budget overrun, the project go live calls for some back patting, an email from the CXO (could be the CIO too) to announce that we are now operational with the new system. In rare cases the Post Implementation Review is conducted by the users or the CIO to validate the base case and benefit if any.
Now the IT organization apart from managing the operations also contributes continuous improvements to the small and large systems working with various internal functions and vendors (hardware, software, development partners, etc.) to address the ever changing needs driven by market forces, internal changes, or sometimes by customers. Many of these could be changes that create significant internal or external impact, but they are rarely on any report or dashboard, leave alone corporate announcements. These typically take away almost 30-40% (figures may vary by company and industry) of the total IT resources. They are deployed and forgotten, moving on to address the never ending pipeline of work.
CIOs should communicate these across levels to demonstrate the benefit, new or improved capability, cost reduction or avoidance they have enabled. To sustain the message of IT enabled sustained enterprise advantage, it is imperative that the users or the IT organization create the visibility. The beauty of the peacock with its feathers in a symmetric formation is to be cherished and enjoyed. If no one knows about it then “IT does not matter”.
Recently, I had an interesting discussion with a handful of global CIOs from Korea, Japan, Germany, India, USA and a few others. It centered on the pains, acceptance and way forward on the much flashed about computing device — across all seminars, airports, lobbies and any other place that you want to be seen with it. It has created a range of wannabe devices, been written about by every type of media, physical, internet, business magazines, newspapers, leisure, technology … Sigh, you get the point? I am referring to the Apple iPad.
The iPad has taken the IT world by surprise. It started off as a consumer device, and stormed into the corporate world — taking the CIOs literally on the wrong foot, just as they were getting comfortable with the iPhone. A CIO recounted the story of his team being given the task to connect a new shiny device to the corporate network; when no one had ever seen such a contraption. While the IT team was able to get it onto the corporate network within the stipulated 30 minutes (an unreasonable demand from the Chairman’s son), others have not been so fortunate, and have later discovered employees happily connecting to the WiFi network.
Driven from the top, the iPad has infiltrated every organization, giving a hard time to many CIOs. Sales and marketing organizations are creating business cases for deployment, while the evolving market is pushing newer competing devices. The applications landscape is catching up fast with enterprise software vendors getting there. Although challenges around security exist, new opportunities are vying to offer game changing business propositions that did not exist earlier.
The convenience of this tablet device scores over the conventional laptop, but is a long way before it replaces it totally. As manufacturers experiment with the form factor and features, one thing is certain — the iPad or equivalent is here to stay. Globally, the iPad has been successful in Pharmaceutical industry for detailing. Market researchers now use it for interactive discussions, even as it becomes a convenient add-on to the CXO, and an alternative to e-book readers, amongst others.
CIOs should move into proactive mode to embrace the inevitability of tablet computers within the enterprise. It is time to redesign processes with the new device — rather than replace current devices for existing processes — as the benefits may not be worth the effort. The iPad is disruptive technology, and thus deserves different treatment. Challenge the enterprise across layers to explore how it can create new possibilities that did not exist before.
The global CIOs without exception agreed that they have to deal with this surge. Some are approaching it using policy, while others are taking it head on. So don’t wait around to get beaten up by the business, as it may just bypass IT to serve their quest for innovation.
Many moons back, this column was conceptualized based on the intermittent musings posted on Oh I See. It has evolved with feedback from readers and critics in equal measure who keep providing me with feedback, headlines and thoughts that can be converted into a column. The weekly frequency has settled down to a couple of hours over the weekend — after many hours during the week has been consumed in figuring out what matters — amongst the many wanting attention.
CEOs, CIOs, students, techies and business readers have written back with their views; some in agreement, a few in disagreements. I learned different perspectives from both — views that added to the richness that I consume and try to disseminate across this column. The Gonzo approach (a la Hunter Thompson) to Oh I See appears to bring out the warts, moles and at the same time, airbrushed images that attempt to make them palatable. Until a few weeks back, I was ignorant of this branding, until it was pointed out by the editor at TechTarget. I am simultaneously suitably impressed and humbled.
Celebrating a year of Oh I See and reflecting back on the various topics that were brought up, discussed, debated, challenged, analyzed, I hope that you would have gained something; a laugh, a connect to the CIO reality. If nothing else, it’s a smile or a frown — hopefully not a grimace. But if your reaction was indeed extreme, did it stimulate you enough to write back? And if not, then you better do it the next time.
Last week was great. I managed to catch up with some old colleagues whom I had mentored. It was heartening to see them achieve new peaks in their career. The event that brought us together from different parts of the world was better than most, since it had limited product pitches (which were relegated to one-on-one meetings, though some did escape). The learning was indeed that irrespective of geography or industry (specific and additional challenges could be regulatory), experiences across the globe seem to mirror each other with fair consistency. Similar challenges and opportunities observed during discussions with peers from China, Japan, and other countries reinforced the belief that the human factor overrides all other forces.
Is there a Holy Grail for the CIO that can overcome the nemesis of IT? Something that manifests itself as one or more of “Alignment”, “Change Management”, “Budget pressures”, and “People issues”.… Someday, I hope to find the illusive mantra that CIOs can universally apply under most situations to overpower Medusa.
Back to Oh I See and the journey through the year, I hope the coming year will have a lot more to discuss and write about. Amongst the feedback, my favorite quote comes from someone who aspires to be a CIO. “I don’t need to read books or take management training from any business school any more. Your regular articles on different sites like STL center, Oh I See, IT Next, etc are enough to fill all the required skills and capabilities in me to get and justify with the position like CIO /Head IT.”