How should vendors engage with CIOs?

Also read: Improper Selling Tactics by IT Vendors: Part I and Part II

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For IT Vendors, CIOs are a very sought after audience. As a result, they always solicit face contact with the CIO to pitch their wares, hoping to get a foothold in the company. These vary from license sellers (paper licenses or shrink-wrapped), hardware vendors, consumables, networking, security, applications, custom development, maintenance, testing services, manpower augmentation, staffing services, consulting, strategic alignment, and so on.

If I were to create a comprehensive list (which I will do some day), it would probably run into multiple pages! CIOs endeavor to keep these individuals and companies at bay, as they seem to be interested only in selling, and nothing else. Also, consider the fact that CIOs would only be listening to vendor pitches and groveling through the week, if vendors have their way.

Vendor pitches range from “the cheapest”, “cutting edge”, “better than the other”, and in a few rare cases, “solve business problems”. The majority fail to engage in a dialogue or listen, as if they have the entire routine by rote — the moment they are in front of the CIO, the Play button is activated! Unfortunately, only a handful of vendors understand the realities of your company or industry. The typical vendor repeats stories that may be out of context (based on experiences with companies or geographies, where the challenges are dissimilar to those faced by you).

With IT budgets either about to lapse (in a few cases) and new budget preparations (for most of us), vendors endeavor to wrangle their way into our minds. These heightened pitches tire the CIO, and in many cases fail to gain traction of any kind. The story repeats itself many times over, with the results remaining the same.

Albert Einstein said it very well, “We can’t solve problems by using the same kind of thinking we used when we created them”. Vendors should stop selling, and start listening to their prime customers — the CIOs — on what they are working on, and then help them succeed. According to the Peter Drucker quote, “A customer never buys what we sell”. This is more so in the case of IT.

Every time a vendor approaches a CIO, his understanding of the CIO’s need should supersede the need to sell. Just the fact that you have a solution, does not imply that I have the problem!

New Year celebrations!

Wishing all a very happy new year, and a great decade ahead!

I am sure that most of you had a wonderful time enjoying your favorite activities with your friends, relatives, and even strangers. The number of messages (SMS, tweets, emails, Web posts, etc) multiplied over the weekend. And in almost all cases (I am sure there were a few exceptions), they were delivered to the intended recipients. All this was enabled by the IT infrastructure which worked seamlessly, despite the additional load generated by hundreds of messages, which implied a multiple factor loading over average transaction loads on the servers and networks.

No one really planned for this surge, unlike the planning that typically goes into catering for month end or quarter end processing. It just worked!

Does it mean that most IT organizations deploy infrastructure that is way over the required average load?

Most analyst reports indicate that average usage of the IT infrastructure ranges from 5-30%. This is where the virtualization story promises to deliver higher utilization levels. So how would one explain the success for highly virtualized shops, where utilization is higher than the numbers stated by analysts and vendors? Did we receive messages sent on the last day of the year after a few days?

At least in my case, I know for sure that the messages that I sent out (about 10 times the emails I send in a day) within a span of 20 minutes — all of them were received by the intended recipients within a few minutes.

The bogey of capacity planning, utilization levels, right sizing of servers, etc. for our messaging and collaboration platforms would appear to be highly overstated. Most IT shops play it safe, and buffer in more than 200% capacity in such infrastructure. However, the same hypothesis does not hold good for business transaction systems, which do tend to feel the pressure over month or quarter end sales cycles. Users end up at the receiving end during these peaks, and the reactions to such planned upgrades are slower than expected.

Maybe, cloud-based models for compute power on demand are an answer to such issues. But their deployment still remains experimental (at best), for mission critical transactional applications like ERP, financial accounting and supply chain management. As the interoperability of applications and base infrastructure improves, with consistent bandwidth becoming available on demand at affordable rates, the sizing problem will slowly die a natural death.

CIOs should review their capacity planning assumptions in the New Year as they engage with vendors and users, learn from the past, and take some calculated risks. I am sure that sooner or later, these questions would be posed; the answers may not be very easy.

Do we need IT budgets?

There is a general agreement that 70-80% of the IT budget (this figure varies depending on the reported overall IT operational spends) gets committed on the first day of the year. Whatever remains is typically spent on new initiatives and projects. While the reality may vary from company to company, the same question has been posed time and again in such a scenario.

So do CIOs need to prepare elaborate IT budgets?

In this context, one of the CIOs I was talking to mentioned that he has stopped preparing IT budgets altogether! Instead, he transfers all spends to the business, as they decide the business requirements — whether it’s operational or project driven. He asks them to justify why any project needs to be undertaken, and what should be the ROI. An interesting perspective, I must say.

Such maturity can be reached only in two situations. First is if the organization has evolved to a level where CXOs are in sync with reality and work in tandem towards achieving their objectives. The other situation entails that CXOs are totally disconnected, and have no faith in the CIO’s ability to manage his budgets.
My survey of Indian enterprises (by talking to CIOs) reveals that operational IT expenses are typically lower than consultant projections — by about 10-15%. This is a reflection of our lower wage bills, and the ability of Indian CIOs to stretch their IT budgets a bit longer than their peers in other geographical regions.
Does the learning from global CIOs stretching their budgets apply to Indian CIOs? To some extent, yes! But the big differentiator that most global enterprises depend upon to shrink costs has limited relevance in India — outsourcing to offshore vendors.

If the CIO splits his budget into two parts — operational IT (business as usual) and business IT (new or incremental projects creating value) — the management of IT budgets becomes easier. CIOs still have to run an efficient shop. Also, accountability still rests with the IT organization, when it comes to managing the overall infrastructure, applications and relationships that create an ecosystem to support business operations. Improvements driven by new technology trends and innovation are essential, and this is what IT organizations have to excel in — even if it is outsourced. The placeholder for such spend is not relevant, whether it is integrated with the business budget or a separate IT budget, as the cost is finally allocated across business units.

Business IT or strategic IT is a larger discussion. The CIO’s maturity and relationship with CXOs is the key to success. Working in step with his peer group, a CIO can influence the outcome, which is whether the budget is approved or not. My belief is that an individual CIO who aspires for lateral growth should understand how to manage within a budget. At the same time, he must understand the impact he creates on business operations, customers and stakeholders. For this alone, the IT budget’s ownership has to rest with the CIO.

Reality check for IT consultants

Earlier this month, I had the opportunity to meet with, and listen to a bunch of IT consultants from global consulting and IT companies. All of them presented their view of the CIO challenges and opportunities, and without exception sounded like they had dug into the same library or archive to create slides which said the same thing — though the words were different, to their credit. This presentation made to a gathering of more than 50 CIOs stunned the audience. And this was not because the CIOs were bowled over by the analysts’ insights, but because the presentation was disconnected from reality.

Consultants have a wonderful habit of looking down upon their audience in a condescending way while preaching their version of truth, which says, “I know better than you, and I have a prescription for the ills that pain you”.

So the consultants under discussion were attempting to advise CIOs of their current challenges, reality and cures for the situation. While the number of points was consistently at 10 (wonder why everything has to be “top 10”!), the order of appearance of the topics was not in sync. The most interesting part was that no one, I repeat no one, in the audience agreed with the consultants.

So the questioning began:

1. Did you actually survey or speak to CIOs and CEOs to create this list?
2. What was the sample size?
3. How many of them were located in India (since the presentation is being made to Indian CIOs)?
4. Considering the sample of more than 50 CIOs in this room, did anyone here participate?
    

As the cross-questioning got uncomfortable, the consultants were tying themselves into knots and literally sweating (despite adequate air-conditioning). One of them had the audacity to state that, “I am the consultant and speaker for this session; you have to listen to me!” 

That was the last straw for most, and the duel almost resulted in an unsavory situation. It was rescued by the organizers — just in time.

It is evident that the CIO has a better connection with reality and business. The challenges and opportunities for Indian CIOs do not revolve around Business Speak or Alignment, but Value Add, Enabling Business and Growth. Global consulting companies are slow in realizing this trend, as the world at large still revolves around the US for them (maybe because most of them are headquartered in US).

The post event networking saw a face-saving quote from one of the consultants. “I was asked to provoke the audience, and I succeeded in doing that”.

IT-enabling the CXO

A close friend narrated this incident about a CEO who asked the IT organization for three laptops. The first one for use in the office, second during travel, and the third to be used at his residence! It was one of those unchallengeable CEO mandates. My friend thought of this incident as a compliance issue or misuse of power vested with the position. To me, it was interesting that the CEO even thought of such an arrangement without realizing the improbability of how it will aid his work.

Every organization endeavors to define and execute policy with minimal exceptions. These are discussed, debated and agreed upon by the management — signed off too, in a few cases. Everything works well until the first exception request. Such requests typically come from a high performer or a CXO who states constraints within the defined boundaries. Thus begins the dilemma which is normally taken as an acceptable deviation to aid the CXO/high performer, as no one wants to leave any room for doubt when it comes to performance.

The IT organization struggles to maintain normalcy, since the precedent is taken as the new norm. After a while, only two choices remain — change the rulebook or try to save face by diligently documenting each exception. The third alternative is really not an option, since it means that you have to take a tough stance and deny the request. Is there a way out of such a predicament, especially when you consider that powers vested with the CIO are not absolute and can be overridden by the “business requirement”?

Coming back to the story of the “three laptop” CEO, I asked my friend about how the CEO proposed to use this distributed computing to his advantage? Did he not realize that he was misusing his executive powers which may be challenged by the Board of Directors or may set an avoidable example for other CXOs to emulate? I was advised that the CEO was creating value, and by virtue of this, the Board may allow such small indiscretions and look the other way.

In such cases, I believe the relationship and openness existing between the CIO and CEO will play an important role (where healthy discussion and debate exists), as does a possibility of influencing the decision. CIOs should work diligently to build and sustain this relationship to remain relevant and successful within an enterprise.

What about you? Would you acquiesce to such a request?

Sleeping with the enemy!

Budgeting starts around this time of the year for most CIOs, along with the exercise of defining operations cost and investments for the coming year. This process typically lasts from four weeks for the agile to four months (in some cases). Almost every year, there is an expectation to do more with less, until you reach a scenario where “there is no more left to do more with”. During this time of the year, the CFO is at his peak of influence, since all the other functions which want funds try the level best to justify their investments and plans. 

Recently, I was asked to present to a group of CIOs on “How to make your CFO your best friend”. Such a subject can be a hair-raising experience for most seasoned players, as it requires a strong financial background and understanding of the business to put across acceptable metrics and KPIs for the management team. This is where a skilled CIO can get budgets approved without the proverbial scissor’s side effects — it’s possible to avoid typical across the board budget slashes (of, say 20%), especially on the operational side of things.

Long time back, I decided to separate the operational budget and the investment (read capital expense) budget. My intention was to let the business decide the projects that they wanted to invest in. This ensured that business created the P&L for their projects.

Obviously, IT had to help the business with the figures and merits of each solution. In most cases, business would choose the best possible solution and succeed in justifying them to the CFO and CEO. This shift signifies that we will help implement and execute the project from an IT perspective, but you (business) own it. Many cases required the creation of innovative KPIs rather than the conventional ROI or IRR models to help the business justify its investments.

While setting the operational budget is relatively easy, the expectation to reduce budgets year on year remains an interesting discussion. In one of the cases, I took a menu card approach to operating expenses. If you want good speed of response from your network, you have to pay higher, like a toll paid to travel faster. Hardware refresh can be analogous to replacing cars every five years, a common corporate practice. Why? Mainly since the cost of maintenance goes up, and availability of spare parts is also an issue.

It’s possible to have the CFO as an ally, if the CIO understands the compulsions and metrics that the CFO has to manage. After all, CIOs are also responsible for managing the cash flow and acting as conscience keepers for the company.

What is the role of a CIO?

At a recent social event, I got introduced to a new-age professional — one who hobnobs with CEOs and Boards, all the while talking about environment changes and the resultant impact on future climatic conditions. Post the introductions and a bit of discussion about carbon credits, she innocuously asked me the question, “What does a CIO do?”

I was taken aback, aghast, and speechless for a few moments. Seeing my face, she quickly added, “Sorry, I have not come across CIOs in the past.”

And they talk about CIOs driving their companies’ Green agenda!

So I tried to give her some answers based on commonly accepted definitions and job descriptions loved by CIOs and executive search companies. She listened attentively as I started my discourse on the strategic nature of a CIO’s position and how the role has evolved over a period of time to now being recognized as an integral part of the C-suite. However, it was obvious after a few minutes that she was just being polite. She had no interest in the wonderful stuff that CIOs do — at least, not in what CIOs believe is wonderful.

The fundamental question nagged me for a few days after this fateful meeting. So I started asking a few peers that question —without exception, everyone wondered if I needed to visit a Psychiatrist. The more I thought about it, the more it haunted me. My Eureka moment arrived, by chance, while reading “The Whole New Mind” by Daniel Pink.

CIOs are left-brained people pushed towards right-brained activities and they face a constant struggle. The CIO’s role involves a transformation from being the glass-house’s keeper. He has to mold himself to becoming worthy of the oak desk corner office and a seat on the management table. For most CIOs, this has been made possible by successfully traversing the path from being a technology person to a well-rounded professional. He has to be the person who is equally at ease with techie stuff, as well as balance sheets and customer engagements. The CIO is unique in his ability to contribute to all segments of the enterprise.

Now, that’s an unusual way to describe a CIO. But to me, it’s a very satisfying definition of a continuously evolving role.

How much of IT do we use?

Every now and then, a familiar question comes up which IT and the business is expected to answer. “How much of the ERP/CRM/SCM/… solution’s features do we use?” How do we increase this to gain the most from our investment! As a result, everyone gets down to analyzing the feature set once again, painstakingly attempting to move beyond the standard 30% number in good implementations.

In the last year or so, many CIOs struggled to provide a rationale to this question, while others undertook the task to improve usage. This expectation needs some careful analysis to understand why this question comes up periodically — all the more so in difficult times, when other investments are scarce.

There are significant expectations to be fulfilled when organizations make large investments in commercially available software solutions. These expectations set by the vendors, IT team and occasionally the business project lead tend to indicate that upon implementation, the enterprise will undergo a transformation from its current state to a highly optimized state giving it a significant advantage in the industry. This overselling of benefits continues even today — many decades after three letter solutions entered the IT arena.

Any large generic solution coupled with industry-specific templates or add-on modules will be feature-rich in its endeavor to address all types of scenarios — irrespective of whether they occur within your specific organization or not. Some of these scenarios are executed based on every company’s specifics, while others are not deemed relevant. Thus starts the journey of partial usage, which is accepted during the project. Over time, the vendor continues to evolve his solution based on customer feedback and industry evolution, irrespective of whether companies adopt such incremental functionality.

I believe that CIOs should draw parallels from other commercial products to educate the business on why usage will always remain sub-optimal when measured as a percentage of all the available features. A handy example on this front can be the humble cell phone, which is bought by people based on new features that are added faster than most of us can comprehend. 90% of cell phone users (which includes the same corporate teams who berate the IT solution’s inadequate usage), do the same with these devices. Or move the lens towards television sets, which are bought after careful evaluation — only to be used for the most basic features.

We keep on upgrading office productivity solutions like word processors, spreadsheets and presentation tools, but rarely evolve beyond the earlier feature usage. So why do we have to run after every new version? To remain current and compatible, of course!

Can the same apply to our ERP/CRM/… solutions?

Monday blues!

A recent news item caused curiosity; it said Monday blues are at its peak at 11:45 AM on Tuesday!

Till I entered the corporate world, “Manic Monday” (from the music band Bangles) was just a song for me. I was told that every day is a Monday in the world of IT, since the IT organization is always running to stay stable at the same place. During the initial years, I thought I was missing something. As I move up the ladder, the realization might happen about how bad Monday can be. I used to see many wrinkled faces with worry written all over — I was told that stress causes this phenomena.

IT was required to ensure that systems worked round the clock, week, month, year, millennium and IT did. Monday was a complex mix of weekly review meetings, MIS reports, higher loads on the system, and IT under pressure! Most CIOs bend backwards (often forward too) to meet the challenge.

Innovation has become a basic expectation. So has change management, business knowledge, and so on. Start running faster?

Why should Monday be any different? Is it only because Monday comes after a weekend of relaxation?

If so, people who work six days a week (there are still some enterprises who work six days a week — at least every fortnight) should be less stressed over Monday. But, that is not the case.

Or is it the case that stuff which piles up over the weekend requires quick attention on the first weekday? If this indeed is the case, in today’s age where smart phones, wireless laptops and many other ways help you to remain connected, events do not typically wait until Monday to seek attention.

So what causes “Monday days”?

As I moved companies and up the ladder, the Monday phenomena remained elusive until I attended a training course that helped me understand human behavior and how people react to different situations. Slowly, I began to realize that the Monday Blues are a self-inflicted disease by the corporate world — one which comes out of need for action, activity and attention.

Work pressure is here to stay, but stress is purely optional. This applies to the Monday phenomena too.

Whenever I fixed external meetings on Monday mornings, people wondered whether I had nothing to do or how I manage to “manage” Mondays. My comment to them has been, and still remains the same: When your process is set, and the team knows their roles as well as dependencies, the Monday chaos is minimized to a large extent. Do not focus on the activity, focus on the outcome — delegate the task, do not abdicate, or else pressure only rises. There is no magic formula or Holy Grail, but planning and discipline that helps you overcome the flurry of activity demanding your attention.

To IT and its role in project failures

I recently read a report about the global annual cost of IT failures, wherein the author puts the figure at US$ 6.2 trillion based on certain assumptions. It’s almost half of the US GDP, and that is indeed something to think about. Never mind the assumptions or math behind the figures, but the reality is that this humungous number is being labeled as an IT failure.

A Standish Group report on reasons behind the failure of projects with significant IT components indicates that IT contribution to unsuccessful projects is less than 10%. So the number is closer to US$ 620 billion in reality. And that is about half the GDP of India!

Knowing a bit about IT, I would label this as a business failure to capitalize on the potential that IT could have offered to them. Why does every initiative have to result in painful change management (which the IT organization should drive)? What prevents business users from embracing new technology solutions despite their vocalization of requirements (in some form or other)? Are there any answers that provide a holy grail to the crazy figures out there?

My Oh I See moment happened many years back, when my obstinacy to not start a project without the business leader’s signature delayed project commencement by 11 months. And when we did complete the project within the stipulated time of six months, it was like delivering water to the desert weary traveler (who has stopped believing in mirages). So don’t push hard to implement the next SCM, CRM, or whatever TLA (Three Letter Acronym) technology that you believe will make the difference — because it will not, if no one uses it!