December 14, 2011 12:10 AM
Posted by: Arun Gupta
, IT budgets
, IT governance
“My marketing team is wresting part of my budget of customer facing applications and social media; at the same time, the funding for the new budgeting application is with my finance team. The IT budget is now almost 50% of what it was last year. How do I regain control over my budget?” wailed a CIO in a panel discussion on, amongst other things, trends that are likely to be a reality in the upcoming year.
The panel sympathized with the protagonist CIO and a few from the audience attempted to offer solutions. The debate threw up some interesting thoughts on how the budgetary control could be retained with IT. Ranging from bureaucratic rigmaroles to bullying and many other similar trending behaviors, the suggestions were analyzed and discarded as untenable for either being against core values or not implementable without inflicting self-damage.
The IT budget has been a discussion point for some time now. It predicted the investments made by companies on technology enabled solutions. The industry created benchmarks around the investments linking it to the top line, graded by industry. The maturity of IT usage was linked to this figure and anyone spending below the benchmark was seen as a laggard or highly efficient.
Then came research reports on innovation versus business as usual; ranging from 70% – 90% of the IT budget being consumed on keeping the lights on, while the remaining pittance being allotted to new projects or innovation. Anyone with BAU numbers under 60% was envied and deemed better aligned to the business. Models were created to turn the ratio upside down and reduce the operational budgets to strategic initiatives.
Economic cycles threatened available monies and CIOs were put under the scanner on every penny (or cent or whatever currency you like) they spent. Do more with less was the mantra, and that is now the new normal. Every disruptive technology was seen as the next silver bullet to help the CIO in improving the dialogue on keeping the IT budget to a respectable ratio to the revenue. Cloud will save money, move everything to Operating Expense; virtualization will save the enterprise IT …
In one of the companies I worked, the IT organization was empowered with the operating expense budget, and incremental innovation on existing technology stacks. There was a discretionary budget for exploration of new trends and technology. New projects and initiative budgets were discussed with the business, and IT advised the funding requirements which rested in the business P&L. This ensured that the accountability for the projects was an equal responsibility shared between IT and the function. The success rate was high and everyone loved IT. Since then I have followed this practice successfully in every company.
I believe that keeping the number in the CIO spreadsheet or the business spreadsheet does not take away the control from either. Mature enterprises and CXOs work together to solve real business problems and not bicker over where the budget lies. When was it about control or the power of the budget, large or small? If the CIO is partnering with other CXOs and is focused on the corporate agenda, then it is about getting things done irrespective of where the number lies.
Does this insecurity befit the CIO?
December 6, 2011 12:09 AM
Posted by: Arun Gupta
, IT policy
, IT security
A trend that everyone is talking about, and which figures on every list (priorities, trends, technology, whatever) is Bring Your Own Device/Technology. It has proponents and opponents from various quarters — within as well as outside the enterprise. Opinions and views, recommendations and pitfalls, management tools and security concerns, the endless list continues to keep the CIO bewildered, irrespective of whether s/he embraces BYOT or not.
From what I recollect, it all started with the iPhone. Then it extended to tablets, laptops, and what have you. Not that earlier personal devices did not connect to the corporate network; they did all that on the wire and then over the air, if you will remember devices with a technology called “activesync”. As the network and technology improved, browser based apps started appearing. Soon enough, the resident app followed.
I don’t recollect all the company provided devices that I have used over the last decade. This would imply that we had a lenient policy even before the BYOT buzz appeared and started haunting every technology professional. The early PDA (which eventually integrated itself into the phone) had limited use, and was not widely prevalent due to its unwieldy size and interface. Except for the early large form factor devices, it was not a statement to make.
Evolution of devices and networks created new possibilities, as the scattered raindrops became a flood. Apps emerged for everything, along power in the hands of the executive; but with no constraints on time. Business impatience became the hallmark of new technology deployments — one that would swamp all available and unavailable time. The CIO built layers of infrastructure, applications and security to manage the demand. It did not matter who or how many used it; if it was possible, then it had to be available.
The democratization of information worried only the CIO until stories of compromise started spreading. Compromise not always by the external world, but bits of information scattered across — slowly fading away with exits and ignorant employees losing devices (or passing hands within the family). Enterprise liability driven by law and governance suddenly found itself at loggerheads with BYOT.
Depending on the country of incorporation and most probably operation, the laws require stringent compliance. BYOT contravenes some with liability creation for not just the CIO but the CEO, and even the global HQ. Recently, I witnessed a cyber law expert thrust the fear of the law of the land to listening CIOs, who cringed with every clause and interpretation of impact to the executives and the enterprise.
So what are the available choices? Will the CEO not want the next new device on the block to be connected to corporate infrastructure? Does s/he not evaluate the ramifications to the enterprise? Is ignorance a good excuse? I believe that the CIO needs to raise the bar with heightened awareness starting with the Board, which then cascades downwards. It takes only a single incident to create collective pain. CIOs can address the contingent liability with reasonable due diligence, control and documentation to dampen down the impact.
It is not going away, but what it means to you is up to you. BYOT = Bring Your Own Trouble, or BYOD = Bring Your Own Demise, or BYOD = Bring Your Own Destiny, or BYOT = Bring Your Own Tension, or BYOT = Bring Your Own Threat, or BYOD/T =? You decide!
November 29, 2011 7:58 AM
Posted by: Arun Gupta
, business as usual
, change management
, cost of IT
The bewilderment was visible to everyone who even glanced at the face; not that too many people were in the room, but everyone could clearly see the expression on the face of the chairman. The trigger was the suggestion that the big ERP that has worked well for almost a decade should be discarded in favor of another one. The animated voice and high throughput beyond the normal diction made it difficult to comprehend the entire story. So I slowed down my friend the CIO of a fast growing enterprise and asked him to begin from, where else, but the beginning.
Over the last year or so there was a rumbling of discontent about the lack of adequate support and the rising cost of licenses and annual support. The problem was brought to the forefront when after a version upgrade necessitated by end of support announcement, the system started behaving abnormally with earlier functioning features now working differently. Stability took a long time to achieve.
On the other side another function was struggling to support the continuously increasing license and support costs. The thought of additional functionality and modules was abandoned upon hearing the new licensing norms. This indeed creates a difficult scenario for the CIO and the CXO to contemplate the future. As the company grows, how to ensure that the efficiencies gained thus far are not lost? How to control the ever increasing burden of Business As Usual (BAU)? The ratios of BAU to new initiatives were in favor but slowly sliding.
So the CIO called his team and started exploring alternatives. Can the already good discounts from the vendor be improved upon? Is it possible to move away from per user license to something better? What if we exclude a section of employees from the technology solution? Would the enterprise technology architecture become complex if multiple solutions were deployed? Would the cloud make any difference to the outflow?
That is how the recommendation came up that the current technology stack be replaced with a competing product which offered (at least on paper) better TCO. And the CIO decided to raise the question with the management which led to the scenario above. The CIO had done his homework by talking to the respective functions and gaining their grudging nods. But the scale of change scared everyone.
We all know that change is not something anyone likes despite whatever pains may be currently plaguing the process, function or enterprise. It takes a lot of effort to even get the idea to gain traction. We discussed the merits and pitfalls of the proposal and agreed that there is no easy way out. The change will be transformational also providing an opportunity to kill a few “this is the way it is done here” kinds of processes. The TCO over the next five years with the projected growth did indeed demonstrate more than 30% reduction.
Reinvigorated, the CIO agreed to push the plan ahead, armed with confidence that he was on the right track and that the change agenda would indeed benefit the enterprise in the long run. Would you do the same if faced with this challenge?
November 21, 2011 9:21 AM
Posted by: Arun Gupta
, IT procurement
, List price
With the economy tightening again and uncertainty across geographies, enterprise spending is once again under focus; this is giving rise to some interesting discussions. Driven by the CFO, CEO, and CIO, who are exploring deferred investments or the usual, ‘doing more with less’, the discussions translate into unrealistic (as griped by vendors) expectations from suppliers, vendors, and partners to provide goods and services at deeper discounts.
The result is rounds of moaning and groaning from either side, citing their versions of reality and pushing the limit beyond the last transaction. The promise of future and making up the deficit in the long term does bend most; a few that do not oblige, are rewarded sometimes, but more often, it is an opportunity lost. The resultant business deals create suspicion if earlier everyone was enjoying margins higher than they should (be getting).
Irrelevance of the printed price
In the IT world, I never heard of anyone paying list price on anything that they bought. In normal times, discount levels used to range from the nominal 10% to in many cases to as high as 70%. It was a rare one time transaction that enjoyed higher numbers. The list price was a marker to decide whose need was higher and who had more patience. Month ends, quarter ends, and year ends provide opportunities offering higher levels of business and discounts. Again, almost everyone recognizes this and plays the game.
In the last slowdown, or recession, depending on which part of the world or which industry you belonged to, a few companies breached 90%. There are anecdotes about free solutions being provided to a few marquee customers either as an entry price or to sustain business. ‘Free’ is a paradigm shift; though the way some vendors are hiking their annual maintenance charges, free does not seem too unreasonable, considering that in 3-5 years you have paid as much as the initial acquisition cost.
So why do vendors continue to print a list price which has irrational numbers and then offer a discount? Maybe to gratify the human nature which revels on a deal? Purchase managers and CIOs work on reducing prices every year. Volume typically adds to the discount but is not the only determinant. Benchmarking across the geographies I find that the level of discount rises from west to the east and then again slides with India and China being the trough. Despite this trend, I haven’t seen a gold rush to shift license contracts from other countries to take advantage.
Renewed focus on IT budgets
The current uncertainty has once again brought budgets into focus. Slowdown in customer-spending is already impacting retail consumption and thereby every industry. Going into budget sessions, the expectation is to once again lower expenses and investments. We still have inflationary trends in many countries and wages are going up for some, while cost of living continues to go up. But the question that haunts me is, if there is indeed so much of buffer that every time the challenge is thrown, people find a way of adjusting to new baselines, then how did the same people allow higher expenses in easier times?
As goes the proverb, “Mother is the necessity of invention”, I believe that with every challenge new opportunities are explored and leveraged on operational efficiency. Technology evolution with new disruptions contributes to improvements; return ratios are however reducing and we are reaching a point where the stretch will reach a break point. We will achieve the pit bottoms sooner than later; the list price will then have to change. Whether it will go up or down is another debate.
November 15, 2011 5:00 AM
Posted by: Arun Gupta
, IT budgets
, IT Metrics
, role of the CIO
The other day I was in a gathering of CIOs being addressed by an eminent editor who was unraveling research conducted by his IT publication. The research surveyed a large number of CIOs who provided their priorities, challenges, opportunities for the year ahead and some numbers (budgets, compensation, and longevity in a role). Based on their frame of reference the audience agreed and disagreed with the data points. This was followed by a discussion on some of the inferences and the qualitative feedback. Then all hell broke loose.
The discussion, like always, touched upon some favorites like business it alignment (BITA), measurement of effectiveness of leaders, and the most debated one, TCO/ROI. Everyone had an opinion on everything and rarely did opinions converge. Some felt that BITA is a non-issue while others still struggle with it; it was opined that the CIO, by virtue of taking on additional business responsibilities and participation in business discussions, has already demonstrated leadership, and TCO/ROI matter to almost everyone except when under the guise of “strategic projects” the issue is sidelined.
The role of the CIO and its evolution from technology to business was justified with the fact that technology evolution and usage patterns within the enterprise have driven newer expectations and thereby the change encountered by the CIO. Alignment need, lack or existence was challenged and treated IT on par with finance and HR or marketing. Contextually, depending on the incumbent CIO and the industry, these are real trends.
Learning from the discussion
Who justifies ROI and who should be tasked with the calculations? Is Post Implementation Review still in vogue? No one had done any and neither did any enterprise go back to review the expectations with the reality. Those who did create business cases with ROI agreed that ROI is now passé. Interestingly a few promulgated that they use the cost of not doing a project and losing on growth, customers or position in the industry. The learning from the discussion could be summed up as follows:
1. BITA is largely dead; it is not about alignment anymore but about working together and solving real business problems. Gap, if any, is the perception that vendors and consultants want to fuel.
2. In the same spirit, ROI or any financial metrics is co-created by the CIO along with the function or business impacted. The justifications focus on incremental revenue or cost savings and are shared between the CIO and the business head.
3. Projects are also being sanctioned with strategic intent focusing on not just the new capability and its impact, but also on the potential disadvantage faced when the capability is missing.
4. The discussion around the table is no longer on the technology, but the impact and outcomes which have to be enumerated using the positive or adverse impact to customers and employees.
5. There will be enterprises that get it and some who don’t. CIOs will jump ship where they remain challenged for too long.
I wonder what is the need to continue berating the role in which we are, the CIO? Can we stop talking about it and get on with IT? Are we creating self-fulfilling prophecies propounding the need for alignment, or the evolution of the CIO role, or at the basic level pondering on how to justify budgets?
November 8, 2011 11:19 PM
Posted by: Arun Gupta
, Economic uncertainty
We live in uncertain times. Global economies are tumbling randomly, impacting everyone within as well as across borders. Citizens and corporates alike are living with FUD (Fear, Uncertainty and Doubt) as the world watches the unfolding of one crisis after another. With survival at stake, individuals as well as enterprises are taking steps to tide over the current quagmire. In our connected world, the impact is felt even in otherwise stable or developing economies.
Past economic events have left many economies struggling. Is there anything that can be learnt from the past? Recession and the slowdown-driven new normal had everyone focusing on cost and then on incremental growth. Successive events have taken away much of the impact, once again driving enterprises and individuals up the wall. Talks of deep cost cutting are afresh, which now chips at the bones with no flesh remaining.
Not too long ago, I interacted with such a CIO who was asked to find alternative opportunities. I learnt about the trials and tribulations of such a situation, especially when there is a gap between two jobs. The person was a great performer and excelled in creating new technology solutions. In recessionary times, discretionary spending was cut. There were no new projects and thus the pink slip.
In good times, every enterprise leader will cite the often repeated cliché, “people are our best assets”. In difficult times, after everything else has been tried, companies lay off assets that can no longer be deemed useful. Normalization has a way of sometimes impacting productive assets too, with resultant attrition hitting operating efficiencies. Layoffs are a reality, and so is the adverse impact they create.
The ecosystem of friends, peers and close family can help overcome the negative sentiment. Seek a coach or mentor who can keep the sanity levels normalized. Even if you are lucky, it takes time to find what works for you, and the new company wanting to hire your services. A non-CIO friend took almost two years to get his rightful position, while his kids and family supported him emotionally. The CIO was lucky to find a fresh beginning within six months.
What could I have done to prevent this from happening? The mind tries to justify and find causes related to personal behavior, performance or shortfall that might have created the situation. It refuses to recognize external forces, instead, attempts to rationalize self-existence. It takes a while for reality to sink in and start afresh. The self-denial phase can last from a few hours to years. This self-pity mode becomes the most unproductive time. It is important to leave behind the baggage and move on with a fresh start.
What does this mean? Be prepared as Black Swans are becoming more prevalent than NNT (Nassim Nicholas Taleb) postulated. Do not feel disheartened when someone close gets impacted. Support the person in any way that you can. When I faced this situation a long time back, my friends and the IT industry leaders provided adequate cushioning to sustain self-pride. I was fortunate to maintain continuity in my transition, and thankfully overcame emotional distress quickly. That’s when I realized the importance of networking and reputation.
We live in uncertain times.
November 1, 2011 10:30 AM
Posted by: Arun Gupta
, Entrepreneur CIO
, Managing change
Recent times have been interesting, to say the least, according to industry news. Angel investments, venture capital, and seed funding have been relatively easy to get by. Every business magazine and newspaper is talking about the young generation choosing the path less trodden. New business ideas appear out of nowhere. Once executed, it makes you wonder why you didn’t think of it, if it were so obvious? These are however the ones that succeed, which I am sure are statistically very small compared to the ones that died prematurely.
The spirit of entrepreneurship seems to be in the air. Faced with a mid-life crisis of unmet aspirations or growth, many are pursuing their dreams of being their own bosses. So I decided to track down a few CIOs who ventured, to find out what triggered their steps towards being an entrepreneur. Some ventured into related industries where they were employed, while a few were totally unrelated to their past employers domain or for that matter IT. What came out was an interesting set of revelations.
Leaving the rat race behind
A CIO, with many years in the pharmaceutical industry, decided to venture into healthcare, and so did another who was in the banking industry. For the former, it was leveraging his business knowledge of the lacunae in the marketplace, while the latter saw an unmet need to address, based on his personal experience.
Both were driven by different stimuli, the common theme was, however, to get off the rat race. Both were good IT professionals, and one would have assumed a journey from mid-sized company to larger enterprises was a logical progression. So when a CIO approached me for advice on when to get started on an entrepreneurial journey, it was an interesting discussion.
We started with his current position, industry and economic impact, and personal growth; all appeared positively stacked in his favor. Then we reviewed his quandary. His role had grown as a CIO, he was respected within his company, and everyone acknowledged his expertise. He knew it would be a difficult task to rise beyond IT, even though he knew the business well. He dreamed of being a CEO, and starting up on his own seemed to be an easy way to get there.
Navigating through the choppy waters
Risks were the economic uncertainty, funding required, and the financial safety that the family needed. Key requirements of an entrepreneur namely the vision, management skills, financial acumen, and marketing abilities were all present. The doubt was about timing, now or later. My advice to him was to take the plunge. There is never a good time like now, analysis will lead to paralysis.
Even in a job, every new venture has a risk element to it. Sometimes we embrace it and sometimes we dither. We call it change management. So why is change difficult? Because we are the cause and the effect; we are responsible for the journey and the outcome. We compete with ourselves and have no other benchmark.
I guess it requires thinking in a different mindset to get off the ground. The chains of comfort will always hold you back. The debate is about when is internal self-reflection, and the answer is now. Do you want to be an entrepreneur? As Charles Kettering, the famous inventor said, “I have never heard of anyone stumbling over anything while he was sitting down.”
October 25, 2011 8:24 AM
Posted by: Arun Gupta
, Predictions for 2012
Like the sun goes down in the west every day, the earth goes around the sun, people make New Year resolutions and the IT industry makes predictions for the coming year. These lists offer hot technologies, CIO priorities, business priorities, technologies that will not last the year, ad infinitum. So what kind of list am I going to create?
Assessing the CIO priorities
Every CIO already knows his/her current priorities, for the next year, and over the next three years (broadly) that fits in somewhere in the organization’s long-term strategy. These are dependent on many factors, some are (though not limited to) industry, size of the organization, geopolitical situation, global market dynamics, consumer sentiment, organization dynamics, and profitability of the company …
The broad collation of priorities, through research conducted, is generic enough to statistically fit over 80% of the CIOs globally; and is available free or for a fee, depending on whose list it is. So I will not pursue this line.
Different matrices, once again based on widespread research and opinions, will tout waves, quadrants, hype curves, scatter charts, bubble charts and so on about disruptive technologies that would matter in the future. Stay with the bleeding edge or lose competitive advantage is the mantra. Some remain emerging technologies for decades like a solution searching for a problem to solve, while many remain niche or never get out of the lab to be adopted in mainstream business. I do not believe I understand enough about these esoteric technologies to offer predictions.
Personal experience and intuition
Having been a CIO or equivalent for more than a decade and a half across seven different industries, I think I do understand the CIO travails and tribulations. To me, every industry brought new opportunities for learning, as well as new paradigms on how existing or new technology can be used. Every slowdown or black swan provided a platform to introspect on successes and lack of some. The next decade and a half will bring disruptions unimaginable today. So here is my list for 2012 and beyond. I can’t predict that all of these will be applicable to everyone; but statistically, over the year you will find some connect.
1. CIOs globally will continue to be challenged on operating budgets. Capital investments will become relatively easier; operating expenses will need to be controlled very tightly.
2. BITA (Business IT Alignment) will fall off the priority list for many as it will no longer be an issue. Business will acknowledge IT contribution and will work with IT to plan business goals. There will be no separate IT goals.
3. Attrition will not be the problem, retention will be. With economic and political uncertainty, staff will hang on to their respective jobs. CIOs will have to take some hard decisions.
4. Clouds will be the first choice for deploying apps for the mobile workforce. The rest will continue to access applications behind the firewall. Hybrid clouds will remain experimental as CIOs figure out that it really does not save money. CIOs will no longer build data centers.
5. Led by Consumerization, mobile devices will be out of IT control (for good) and the personal device will find a way to get inside. CIOs that resist, will have to provide an equivalent additional device, which eventually the business will turn down. Managing multiple screens will become a pain for the executive who will challenge IT to make it simpler. The phone, as a corporate device, will thus be replaced by the tablet over the next two years.
6. CIOs will or be forced to challenge the cost of sustaining big ERP (licenses, support, etc.) as it keeps growing. Alternate support vendors will gain market share. Usage will shift out from the office to using marketplace supplied micro-apps, thereby challenging the existence of big ERP in five years.
7. Social media fatigue will set in and even marketing teams will be asked to show ROI for expenses and investments on such initiatives. CIOs will need to manage expectations around social analytics while consultants will thrive with maturity models and make loads of money.
8. The CIO will continue to be tasked with managing information security with the CISO reporting to him/her. A few cloud bursts (cloud security breaches) will make matters worse before things settle down over 2013 and beyond.
9. Big Data will remain high on hype with vendors pushing and CIOs scratching their heads if it really gives the benefits promised.
10. Custom development of solutions will wane, with an ocean of micro-apps promising to enable business processes as effectively. At the same time, appliances will replace generic hardware.
11. Many CIOs and research analysts will not agree with many of the above points.
I could have gone on and on but will stop now. I thought 11 is good for now; why 11 and not 10? According to Hindu scriptures, it is an auspicious number and if you don’t believe in such things, then I would ask why 10? I know Moses had something to do with it!
October 18, 2011 6:57 AM
Posted by: Arun Gupta
, Managing change
I met a CIO who was wondering what’s going wrong after having spent many successful years in his current position, working with the management team, implementing various award winning solutions, helping the IT team come out of the technology mindset to thinking business, and last but not the least making IT a business partner. He sought to unravel the mystery and find clues on what could be done to overcome the situation.
As the drinks continued to flow, I quizzed him if he had made any behavioral changes? Negative, he replied; everything was going smooth until recently and he had not made any changes to his modus operandi. So I dug deeper; were there any changes in the business scenario, industry, and market position, or anything that could have triggered the change? He stayed silent for a while and then mentioned yes, the company had appointed a new CEO and thereby he had a new boss.
Every organization is dynamic and so is the team that makes the enterprise. Attrition is accepted as normal as it brings in fresh talent and leadership. In most cases, new ideas and styles of management bring forward the strategic agenda of the company. When the new inductee is the CEO, there are always a lot of expectations by the stakeholders. The internal team(s), specifically the management team downwards, has to make adjustments to new style, expectations and the way forward. Few in discord decide to move on to greener pastures elsewhere.
Change of direction
However, there have been some exceptions where the company under new leadership has suddenly found the management team not agreeing to the new direction. Most give the new agenda a try and work towards alignment. It is also possible that the CXOs may decide to move on, citing working or cultural differences with the new leader. Rare instances also exist where the company has floundered until the Board of Directors made corrections (we recently saw that for a large IT company).
As these thoughts ran through my mind, I realized that my friends’ company had seen good results in the last few quarters, which would imply that the new CEO was continuing the growth agenda. So I prodded the issue further; had his relationship with his peers changed since the new CEO took over the reins? Not really he quipped, they continued to work with him like before; his new boss seemed to have some strong relationships with some of his peers and transactional with others.
Restating the objectives
Opening up, he stated that he was being challenged on some of his decisions more rigorously than before; had to present a lot more justifications on any project, and was asked to review the IT strategy and its applicability going forward. The strategy was discussed and approved only a year back, so why the review again? The CIO wanted to start polishing his resume again.
So I had to hit him hard with reality. If the new manager wanted additional details on initiatives, it would indicate that he wanted to update himself and validate assumptions. If he has to justify every project, why is he worried if due diligence has been done fairly and equitably with business participation. Every strategy including business strategy requires periodic review, so where was the problem?
I believe that a dialogue is the means to build the relationship rather than see it as threatening credibility. No two people think alike; so to assume that the past way of working will continue to yield dividends is foolhardy. It does not matter where you are in the corporate hierarchy, change is inevitable, and we have to learn to live in the rain.