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.”
All of us have seen award ceremonies like Oscars or Grammies (on television or live). Some would have also received awards — usually followed by the award winner being asked to say a few words. Almost all of them sound like clichés, since they follow a predictable pattern.
Recent times have seen a number of awards (for the CIO and the next level) competing for the participants’ attention. Some of them have become prestigious and much vied for by the CIOs, while a few have lost their credibility — largely for want of effective communication and process management. Thus, CIOs have now started to choose between the awards that matter to them, and those that don’t. The natural selection process has thus differentiated the ‘Oscars’ from ‘me too’ awards.
Initial years saw the awkward CIOs on stage, as they tried to be graceful in their acceptance speeches. With time, they grew adept at being on stage. This also meant that the speeches became a lot more predictable. “I would like to thank my team, my boss, my users …” it could have been any award, CIO, or company, but the same spiel. After the ceremony, it was back to business as usual, with the accompanying cribs.
In 2009, I found changes. In one of the award ceremonies, the CIO was accompanied by his CEO to collect the award. The CEO stood alongside the CIO accepting the award — sharing the joy — telling the world at large about how the awarded IT initiatives transformed his organization. It was indeed inspirational to the recipient, as well as the audience.
Last week, I attended two award ceremonies, where the number of other CXOs made it a very different story. The CEO and CIO jostled on stage for airtime, and collaborated to tell their success story. Gone were the usual “thank you” messages, which were now replaced by what has changed for the enterprise, employees and customers. It was about revenue generation and profitability.
Reflecting on this change, it is evident that the CIO has evolved into an equal business leader who is not enamored by technology. He is self assured, confident of himself, and is able to hold his head high, while acknowledging the success of initiatives taken or supported by the IT team. I get this warm and fuzzy feeling as I hope that the future will bring better tidings for CIOs — not just in IT awards, but other CXO award categories.
P.S.: One of the CXOs in my organization pronounced that we now need a separate wall for all the IT awards we are rightfully getting. I turned the air conditioning to chill.
Every CIO gets many calls from startup IT companies wanting to bounce their million dollar idea—to seek the CIO’s advice and understand whether it makes sense in the enterprise. Some of these are self-funded, while a few may have angel investors or private equity already in place for growth. The steady growth of such small startups in the recent past has created an interesting problem for the CIO. Why is it a problem?
In quite a few cases, there is not much to differentiate one startup from the other. So how does the CIO separate the chalk from cheese? What is the due diligence required before getting these vendors on board?
A majority of these startups are seeded in institutes like IIT and IIM (globally pertinent equivalents may be the Silicon Valley or MIT kind of institutes), where the idea takes shape fuelled by the entrepreneurial bug. Most such ideas take a while before they gain traction with their target audience. These are the real gems, and being an early adopter of such startups provides an immense advantage.
Having worked with a few such companies, I realize that it does take a lot of effort to get the product/service aligned to enterprise processes and direction. As the first or amongst the first few customers, the value proposition is almost always attractive. Their reference checks largely depend on their mentors (professors or others) who are able to provide the details behind their continued support to the new entity.
The second category of startups comprises breakaway groups from existing companies, where a group of people have decided that their ideas have higher value than what they currently see within a large entity. This group typically specializes in services for a specific technology, domain or application. Such companies do well to begin with as they are patronized by existing customers (supported by them) who see a price advantage with a smaller startup. Such entities pass the tipping point within 12-18 months by either reaching a steady state, or falling apart. The due diligence is thus largely dependent on the team’s leader and its past track record as they continue to offer similar services.
A variant of the second category is a group being lured by an investor who believes that unlocking the potential has good upside for everyone. The service offering is thus no different from the above. A private equity institutional player invests in existing entities that needs funds to scale up or laterally, but in this case the carving out was initiated by the investor. How does one ensure that the entity will survive and make it to the tipping point? The team comes with impeccable credentials; the unknown factor is the investor who may pull the plug. In such a case, it is critical to conduct diligence on the investor and his past track record. Search engines come to your rescue in such cases, as past footprints cannot be obliterated.
Either way, put in safeguards to protect your enterprise’s interests with financial, legal or even escrow accounts to address sudden disruption. Work with your legal team for once, ask all the questions even if they make the other queasy; at least you will be able to sleep with ease.