Oh I See! Getting CIOs to view their jobs from a different angle

March 2, 2010  5:27 AM

Challenges of an upturn!

Arun Gupta Arun Gupta Profile: Arun Gupta

All the analysts have just wound up their discussion about the challenges faced during a downturn. There have been many stories, case studies, and insights on how to survive. In a few cases, the focus even went to topics such as how to thrive in an economy that challenged everyone.

Some parts of the world continue to face issues, albeit to a lesser degree. The turnaround time required for these players is slower than developing nations, where the upswing is visible, and there is already talk about withdrawal of government instituted stimulus. With the sun just beginning to raise its head over the horizon and returning growth, the problems of economic growth have already started bothering companies.

Problems? Yes, economic growth has its issues. I’m referring to the problem of talent retention.

During recessionary trends and slowdown, organizations tightened their belts. Increments were frozen cold, and many took a cut (which hurt), but then it was better than losing your job. Bonuses and variable pay were also victims of the reducing top lines. Most business units squeezed out costs. Thus, fixed costs came down, and helped generate better profitability ratios than ever imagined by many enterprises. Employees stayed put, and worked diligently to help companies tide over difficult times.

By the turn of the year, growth was back in the black. Suddenly, there were murmurs within companies about reinstatement of imposed cuts. Will bonuses be paid again? What kind of increments can employees expect? Predatory companies also saw this as a great opportunity to cherry pick bright talent from competitors, and across verticals. In a few cases, these organizations even targeted high potential individuals by name.

With no clarity, communication or delayed reaction from their own companies, these individuals decided to take the mercenary approach and move on to the highest bidder. The trickle that started late last year, has suddenly assumed scary proportions in many companies. Talent retention has come to the fore, and is now the highest priority for some of the impacted companies.

Inhouse IT organizations will see a high impact due to the coming back of “good times”, since most technical skills are not industry dependent. At the same time, IT companies are hiring (or announcing targets for people acquisition) with a frenzy similar to the scene witnessed during Y2K days (there used to be a standing joke “Trespassers will be hired”). Can CIOs work around this problem with proactive steps (or in a few instances, even go against the enterprise timelines), to retain their best?

I believe that a few CIOs will be able to ring-fence their teams, but many will suffer through the year. Some will end up hiring the best talent from other companies. However, no CIO can afford to sustain a lack of action, as status quo is not an option.

February 22, 2010  7:54 AM

What keeps the CIO awake at night?

Arun Gupta Arun Gupta Profile: Arun Gupta

Do CIOs sleep well, or they are subservient to problems, issues, alerts, emails, etc that keeps them away from their 40 winks? I have been asked this question many a time, and then some more. So it does make me wonder whether CIOs are indeed a sleep deprived lot. So let’s track down the issues that CIOs grapple with (the current perception at least—in many cases, also the truth).

If business runs on IT, then system availability will be first on the list. This is a combination of network, server, applications, and everything in between. Do CIOs get nightmares about downtime? I guess a few do, but most don’t, as their deputy (or the Head of Infrastructure), along with the application owners will typically be tasked with this. The ball does indeed stop at the CIO’s desk, but rarely contributes to insomnia.

Second on the list is that of critical projects meeting expectations on the fronts of budget, time and quality. In a few cases, this will also include delivering business value. These deliverables also get discussed in management meetings, and thus have higher visibility within peer CXOs (and to that extent accountability, with the CIO). When projects do go awry, it is quite likely that the CIO has to intervene and manage expectations (read as damage control). So it is likely that challenged projects may adversely impact the CIO’s ability to have a good night’s rest, unless if the CIO is on top of the situation as the project unfolds. In such situations he can obviate the need for uncomfortable dialogue.

What about budgets? In times of cost cutting and most businesses coming out of survival mode, also referred to as the ‘new normal’, there is indeed pressure to think out of the box to sustain operations at lower costs, while finding innovative ways to fund new projects. Relationships with partners and vendors have now reached a new plane, which discards most benchmarks from the past. While many CIOs are able to balance the investment versus cost debate, some dread the thought of another discussion with the CFO. However, this contribution towards the bedroom woes may be negligible.

Last on the list is talent retention or attrition, depending on how one looks at it. In bad times, people stay, in good times when you need them, they leave. It’s a simple demand and supply equation that CIOs have to struggle with. While the supply may be plentiful, you cannot replace a DBA with a Business Analyst and hope to do well. Outsourcing can help de-risk partially. Thus, in the era of shrinking teams and increasing churn, the CIO’s ability to hold the team together goes a long way towards the IT organization’s success.  Probably something to keep the CIO awake on the day he receives one more resignation.

The reality is that one of these remains in focus for most CIOs. These focal points change periodically. At the same time, CIOs are focusing more on business measures and not IT focused ones. Maturity of the service delivery models, coupled with partner evolution (See: The evolving IT Service Provider), has contributed to some of these not being on the radar (as much as they were in the past). 

So do business issues like lack of growth, profitability of the company, supply chain issues, product or service availability keep the CIO from sleeping well? Probably as much it does to other CXOs in a cohesively knit enterprise.

I guess a wise man said it well, “Work pressure is real, but stress is optional”. So my answer to the questions has been, “I sleep well at night”—at least, most of the time!

February 15, 2010  5:39 AM

Are you happy being a CIO?

Arun Gupta Arun Gupta Profile: Arun Gupta

It doesn’t matter which conference you go to, or who is the person at the discussion’s other end — Whenever the CIO’s evolution is examined, the other person always has a view on what should be a CIO’s next role. Multiple propositions get discussed, including that of the COO and CEO. Sometimes, the lateral inclusions are in supply chain, logistics or human resources, rarely in finance or marketing. But is the CIO an interim position that has to evolve into some other role? Why can’t CIOs be happy being good CIOs?

A few weeks back, a reporter called me. She said that I was one of the few people she knew who was happy being a CIO. She had not come across too many such people within her contact book despite having hundreds of listed CIOs. So this discussion continued on whether a CIO should necessarily move on to another role. If yes, which one?

I wondered a bit as she continued her excited chatter — what’s wrong in being a CIO, and that too a good one! Why is the world interested in my evolution to another CXO’s role (as if other CXOs would be extremely delighted to fill in my shoes)?

Apart from technology expertise, CIOs by virtue of providing technology enabled systems and processes across the enterprise have unparalleled visibility in terms of what happens across each function. They are expected to “know” the business, as well as understand the domain specific challenges and opportunities. Such a knowledge level is essential to provide new technology solutions, whether it’s marketing, sales, warehousing, finance or any other. Typically, this gets referred to as the wonderful world of “IT-business alignment”. Such opportunities give them an advantage over others from the CXO domain who may not have this opportunity (or the interest). Best of all, other CXOs do not get measured for knowing other functions and their ability to engage, let’s say the head of supply chain, in a discussion on the best put-away process.

This advantage and ability to influence business outcomes opens up possibilities. Maybe, just maybe, the CIO could take on additional responsibilities beyond “mundane” IT. In all possibility, he can bring about the best while improving the present. Analytical abilities come to the forefront at this point, whereupon the CIO typically challenges status quo, seeking a better tomorrow. So the question of whether a CIO is ready to take on the role of another CXO or a COO becomes irrelevant. If we push the envelope a bit further, he even has a remote chance of being a CEO. So pressure starts to build upon the CIO to get on with it.

So what’s wrong in being a good CIO? Why can’t the CIO remain in the current role and evolve it into a meaningful contributor to the organization (a difficult task to consistently execute)? At this point, the Board may benevolently grant a seat in the Boardroom’s hallowed chambers with other CXOs, executive and non-executive directors. The CIO then reaches the pinnacle of success within his role’s dimensions. Sustaining this peak position obviously requires as much effort as it took to get there. It’s at this juncture that the CIO can be deemed ready to challenge any CXO and succeed in the new role. Of course, this requires the ecosystem to at least be neutral (if not positive) towards the CIO. A negative or a non-conducive environment will be a challenge for any CXO, including the CIO. (See Are Boards ready for the CIO?)

Time to get back to the question “Are you happy being a CIO?” If you are, great! Build upon your success, challenge the organization, and keep on asking the question, “What do I need to do to get to the Boardroom?” If you aren’t, you are probably a CIO by accident or unable to find the magic formula for success (the magic formula is for another day). If you face a personal crisis on your role as a CIO, you should find yourself a mentor or coach who can help. Otherwise, go and find the right job for yourself!

February 8, 2010  9:54 AM

Are Boards ready for the CIO?

Arun Gupta Arun Gupta Profile: Arun Gupta

Every now and then, we come across the question, “Is the CIO ready for the Board? Can they do justice to a position on the Corporate Board?” This issue has been debated ad infinitum, as some CIOs have already made it to the boardroom — even as others continue to passionately drive the IT agenda within their enterprises. Although certain CIOs are yet to evolve to a level where they equal other CXOs within their companies, the majority of CIOs have already reached a level of maturity to directly or indirectly advise their management on strategic and operational issues that have a strong dependency on the IT systems that enable their company.

While addressing a group of CEOs in an event recently, Ram Charan, the renowned management guru discussed the purpose, functioning and effectiveness of Boards. According to him, the following characteristics differentiate good Boards:


  1. Boards should be competitive.
  2. They should review the external environment, and not remain inward focused.
  3. Board members should know other CXOs within the company, as they drive the company agenda and deliver the company’s vision to the stakeholders.
  4. Global Boards have to balance growth and resources equally well. Resource allocation is a key to Board management.
  5. Boards should continuously review internal and external relationship building by CXOs, and ensure that the CEO also creates a pipeline of leaders.
  6. Boards should have a very clear 12 month agenda, apart from a strategic roadmap.


Now let’s look at the typical CIO and the role that he plays in the company. He provides the information infrastructure that enables his business to interact and transact with customers, suppliers as well as within the enterprise. He also analyzes, presents, protects and disseminates information assets across the ecosystem. A day without IT is unimaginable across most business units (as well as industries).

The CIO is not just the information infrastructure’s custodian or provider. Today the CIO challenges business processes, influences outcomes, and works with all stakeholders across the enterprise to automate, rationalize, and optimize. The CIO’s view of the company has better breadth and depth than that of other CXOs. Their interactions and ability to switch from Marketing to Finance to Supply Chain with ease during different meetings demonstrates their comfort levels with multiple domains. This led to an observation by a leading thinker, “IT is too important to the organization to be left to the IT staff”.

Last week, I had interactions with two mid-market CEOs. A generation gap separated them in terms of age, experience as well as mindset. The younger CEO challenged the CIO and encouraged him to challenge other CXOs within his enterprise. This initiative helped in the CIO’s integration into the management team, as well as a position on the board of directors. His words were bitter-sweet music to the ears of the CIOs he addressed. Some CIOs wistfully wished that their respective CEOs quickly reach this level of understanding. The younger CEO’s enterprise used IT and information better than peer organizations — an impact demonstrated by the company’s financial metrics.

The older and much respected CEO (also on many boards, as well as the founder of an IT company) admitted that his CIO did not have a position on the management table, forget the Board! He put the onus of this challenge on the CIO, and did not believe that he was required to provide any impetus towards the CIO’s career progression. As this Q&A with the CIO gathering progressed, it became evident that the difference in mindsets (and thereby the organizational culture), would have made it challenging for any CIO to migrate to the management team. His contention was that Boards discuss people and money issues, but not IT issues. He felt that this was the result of how his CIO has not created visibility with the Board. He found it difficult to accept that most Board members appreciate the need to be aware of how technology impacts their enterprise or can provide unique competitive advantages.

Considering that experience and wisdom (that comes with age) plays a significant role in the Boardroom’s composition, a majority of directors or independent directors belong to the latter classification. Until Boards transform themselves and induct fresh young leaders who are comfortable with technology, use it daily for normal tasks, and worry when they hear about competitors implementing new technological innovations, it will remain an uphill task for the CIO to find a chair in that room.

February 1, 2010  8:05 AM

The evolving IT service provider

Arun Gupta Arun Gupta Profile: Arun Gupta

IT service providers are evolving, and at quite a rapid pace. To take a case in point, I was invited to a gathering of more than 100 IT service providers and channel partners to talk to them about “How to sell to a CIO”. This is not the first time that I have spoken on this subject; earlier, it was to sales teams of large Indian and global IT companies, but it was different this time. The group comprised of mid and large sized companies who vie for business from the small and medium enterprise (SME), as well as large enterprises. This segment has to balance between different types of businesses — right from owner driven organizations with no formal IT organization as such, all the way to CIOs of large companies. And a lot of such service providers classify the SME business in terms of people, revenue and process.

It was interesting to observe that the audience comprising largely of CEOs and heads of sales (or service), listened with rapt attention. It was eerie in a way — there was absolutely no cross-talk, buzzing of mobile phones, or anyone getting up during the hour long talk (I am used to, and also guilty of, such behavior during conferences). The audience could associate with most references to vendor behavior — their wins and losses, joys and frustrations, ups and downs. It was as if their lives were being subject to scrutiny, at a scale never done before.

On the flip side, the participants had many questions on why CIOs ignore them, and at the same time want the CEOs to visit even for a small transaction. According to many, the CIO egos were a big put off. There were also many questions around the lack of transparency in decision making, the inordinate negotiation timeframes, and then expectations of how the services, goods or solutions should be delivered in super crunch time.

As I made an attempt to answer some of these concerns, it was evident that the CIO’s evolution is still an ongoing process. Not every CIO has evolved to a level of maturity where almost every business transaction is a win-win situation (or every interaction is looked forward to). There are no universal answers that can be applied to every situation, since the CEOs agreed that there is a serious need to impart skills within their teams in order to more easily manage the situation.

Governance applied to IT procurement was another heatedly debated aspect. While vendors like to work with the CIO towards long-term relationships, being the lowest price vendor is not the best criteria for selection in such a scenario. According to the vendors, value additions offered as proof of concept, training and education, post implementation handholding, and technology advisory should be given due weight while taking a decision on awarding the business. The channel partners also expect clear decision making cycles, so that they do not end up in the hands of “purchase departments” who measure only on the basis of savings over the initial offer or budget.

The relationship between IT service providers, channel partners, and the CIO is at best, symbiotic. We need each other to be successful, in our quest for achieving our objectives. A partnership built on shaky ground will not withstand the travails of time and pressure from internal as well as external forces. Trust has to be built upfront and sustained, for each others’ success. To quote my favorite management thinker (at least in 2010), “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself” – Peter Drucker.

As the IT service providers and channel partners evolve to understand their customers, the industry in which they work, the opportunities open to their customers, and work towards creating success for the CIO, it will be a challenge for some CIOs to now engage with them at a new plane of maturity and understanding. It the CIOs fail to achieve this, they may alienate themselves into a situation that will make success difficult.

Are CIOs up to the challenge? It still remains to be seen.

January 25, 2010  7:06 AM

Irrelevance of vendor presentations

Arun Gupta Arun Gupta Profile: Arun Gupta

Let me start with a quote from Peter Drucker — “There is nothing so useless as doing efficiently that which should not be done at all.”

Last month, I was invited to a a marquee publication house’s three day offsite CIO event to discuss the coming year’s IT agenda. Topics on the agenda looked good, the attendee list was glowing, and a long standing relationship with the Editor propelled me towards attending this event. So I packed my bags and decided to give it a shot.

Almost all such events invite a couple of CEOs and thought leaders to share their insights and provoke some thought within the audience. And the CEOs did not let down on that promise. They had the audience eating out of their hands, listening with rapt attention to every word, absorbing it, taking notes, discussing with their neighbors, and in the end asking a lot of relevant questions. The act was a tough one to follow, but the CIOs were charged.

As a result, they (the CIOs) did not mind a few vendor presentations. To their credit, the CIOs did attempt to follow these sessions, but it was a difficult proposition to keep the lids from drooping.

The following days had everyone unanimously wondering what hit them. The torture began with inane presentations ranging from the usual suspects — virtualization, green data centers, cloud computing, outsourcing, intelligent cabling systems, network rationalization, and so on. A few consultants tried to revive the audience by raising questions about CIO reporting and their efficacy. The audience was too numbed to be provoked, and let it go with a mild reprimand similar to “Don’t disturb my sleep”.

The icing on the cake was a presentation on “What is a Data Center”. Yes, men are from Mars, and in a predominantly male crowd, by association CIOs could be classified to belong to Mars. But telling a CIO about what a data center is like is rather akin to teaching Michael Schumacher how to ride a car! I wanted to insert an analogy on Golf, but decided against it.

Without exception, every sponsor had a slide deck (with a minimum of 30 slides) to be displayed to the captives. They ranged right from very basic elementary stuff and all the way to one which wanted CIOs to learn how to move virtual partitions across servers. To be subject to such a score of presentations over two days beats the torture that even the famed Nazi inflicted on their poor captives.

Despite being advised against it by the organizers and post event feedback by the audience, it beats me as to why vendors insist on subjecting CIOs to repetitive presentations with nothing new to talk about, and preach their version of religion. To top it all, these activities are dished out by sales and marketing folks, who are not even subject matter experts (these people could potentially be challenged by the listeners).

The last straw (in a few cases) is the substitute junior staff member reading out slides with no eye contact with the audience. Such a person is typically in a hurry to get off the stage in order to avoid any cross-questioning from the few members who suffer from insomnia. I would rather withdraw the slot than be the subject of “How to reduce your exposure to this vendor”.

Has the IT vendor become a slave to these habits? Has their thinking has become clouded (a side effect of cloud computing?)? Is the scene so bad that IT vendors are unable to explore alternatives to engage their prime customers — the CIOs? Whatever happened to good old case studies, panel discussions, and interactive sessions in the form of a Q&A? Are vendors unable to stand tall without the crutches of slide decks which no one wants to see? Why do vendors continue to alienate themselves from their customers?

I guess it’s time to get back to basics. To quote Peter Drucker once again, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.” Will a publishing house donate some Peter Drucker books to all the Marketing Heads of IT companies?

January 18, 2010  9:30 AM

CIO publications have yet to evolve!

Arun Gupta Arun Gupta Profile: Arun Gupta

On an average, I receive more than 100 email newsletters every week from various publications and sites that focus on CIO agenda and leadership. These newsletters are expected to help me keep abreast with what’s happening around the world in the domain that I made my career with, which is Information Technology — now almost always referred to as IT. My mailbox has been full of such messages for as long as I can remember, maybe a decade or so now.

A decade back, the IT leader — now referred to as the CIO — focused a lot on applications, infrastructure, new technology innovations, and business process improvements. In a few cases, the CIO also participated in discussions that were indeed strategic in nature. Contributions to ideas and products were happening even then, as they are the norm today. Ten years back, emails were not as many as they are today, pure-play content sites were few, and not too many sent daily updates. The focus was typically on the nuts and bolts that make up IT infrastructure, the wrapping around it, the database, middleware, presentation layers, and packaged applications which were replacing legacy custom coded programs.

The CIO’s role started transforming in the early part of this millennium. This was driven with the expectation that if a CIO has to retain his right at the table, he has to become more business savvy and leave technology to partners and outsourced teams, as these skills became commodity. IT teams reorganized themselves around business functions and avidly pursued learning of, and about the business and processes. The focus was on how IT teams could contribute towards achievement of common corporate goals and objectives. Vendors and consultants changed their pitch to the CIOs talking about business issues, measuring the efficacy of the CIO’s business knowledge, and how they applied this towards solving real business problems.

Thus CIOs started to attend executive development programs, speak about business technology, scavenge management books, and debate with management thinkers. It was suddenly about how to challenge CEOs and other CXOs on how they can contribute to the business. A few expanded their roles into other parts of the business.

All along, CIOs continued to stay in touch with their roots through various newsletters, magazines and online publications. These media channels continued to feed them with latest happenings in technology, vendor landscape and case studies of how someone leveraged technology investments (in a few cases). IT-business alignment was one of the much debated subjects.

But guess what? Media continued to push technology content down the throats of CIOs who were not really interested in that stuff anymore. Yes, awareness of trends, innovation, new gizmos, and collaboration technologies was important, but not to the level of detail that is being published. That is stuff for IT managers, the doers, and the technical teams (outsourced in many cases).

And that confused the CIOs on whether they should retain the level of in depth technology expertise which is being thrown their way. Most weaned themselves off such content, to make the move towards domain, industry and softer issues that a CXO has to manage every day. Content for such learning is rarely available from even marquee publishers — offline or online.

Such disconnect between expectations drives home the point that the evolution of information givers to the CIO is still incomplete. Media has lagged behind the role that they themselves have created for the CIO by egging them away from the technology stuff towards what matters. We are thankful for that, and hope that CIOs will no longer be subject to tips on how to configure a listener for a DB or resolve malformed IP packets or even look at performance management tools for networks!

By attempting to address a range of audience which spans mid-level managers to executive directors and senior vice presidents, the upper segment is being alienated. And if the CIO is indeed the focus, then a major transformational change is required.

January 11, 2010  5:27 AM

How should vendors engage with CIOs?

Arun Gupta Arun Gupta Profile: Arun Gupta

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


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!

January 4, 2010  5:47 AM

New Year celebrations!

Arun Gupta Arun Gupta Profile: Arun Gupta

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.

December 20, 2009  3:10 AM

Do we need IT budgets?

Arun Gupta Arun Gupta Profile: Arun Gupta

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.

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