An average 13.5% of your IT organization’s time is spent on vendor management and procurement. That’s based on Gartner Inc.’s recent polling of more than 1,300 organizations. It’s an activity, Gartner suggests, that takes too big a chunk of your staff’s time for you not to manage it strategically. And guess what? No matter how much of your time is devoted to managing the vendor relationship, it’s too much.
“Your time is very expensive. Your employees need that time. Your executives need that time — and vendors are consuming that time,” Gartner analyst William Snyder said. “Time is squandered.”
And it’s squandered on a relationship where data shows that the other party — your vendor — often has the upper hand. An average 50% of your vendors have key cards for access to your data center, according to Gartner’s research. Having a key card allows unfettered access to your staff, which means that these vendors almost certainly know more about your staff than you do, Snyder said. They have free rein to sell to your staff. “The key card is access into a sales goldmine,” he said.
As a way of regaining control of their environments, some CIOs have revoked all vendor key cards until they can determine which vendors need or deserve that access — a step Gartner does not necessarily recommend taking. What Gartner terms the dissymmetry in information in the vendor relationship, however, must be closed, or CIOs will be at a disadvantage in any dispute with vendors. Moreover, many vendors come into any disagreement knowing that switching vendors comes with risks and is not worth the hassle.
These cautions came up in a session at last week’s Gartner Symposium/ITxpo that was billed as a CIO guide to managing vendors. The session laid out the common mistakes CIOs make in managing vendor relationships, and offered what seemed to me a lot of practical advice for improving those relationships, for example, by:
- Using lightweight crowdsourcing to develop a more objective view of the vendor. Rather than rely on one manager’s opinion, find 10 staff members who deal with the vendor, and poll them regularly over a period of time to develop a vendor scorecard.
- Dealing with the vendors on their turf, not yours. You need to know as much about your vendors as they know about your organization. That means staying on top of how their companies are doing in the marketplace, changes in the executive ranks, and financial analyst ratings.
I’ll be looking at some of these mistakes and pointers in more depth in coming weeks, but here’s some food for thought in the meantime. Snyder’s big takeaway is that CIOs should not — repeat not — meet with all their vendors. It’s important that you meet with the vendors that make a difference to your organization. The CIO role carries weight. Use it effectively, he urged. “If you don’t use it selectively, what ends up happening is, you don’t have gravitas,” he added. “Reserve the power that is embedded in your role.”
Seems like wise advice.
Let us know what you think about this blog post; email Linda Tucci, Senior News Writer.
I recently heard an interesting twist on crowdsourcing. It wasn’t about the marketing group combing social media sites for new promotional ideas, or businesses having online contests to gather new product ideas from consumers. It was about CIOs and their business peers gathering with customers to come up with new products and services.
Called customer crowdsourcing by some, the idea is to get customers involved in the product and services design process. Now, this is nothing new for software vendors. Customers are often involved in the development and patch cycles, especially in these days of frequent Software as a Service release cycles. What I haven’t heard of as much, until recently, is a push by businesses outside the technology area to involve customers in product design and conceptualization. Talk about having the inside scoop! These customers are being treated almost as extensions of the product maker’s workforce.
Harvey Koeppel, executive director of the Center for CIO Leadership in New York, brought the subject up recently during a call with SearchCIO.com. The center taps its 2,100 members to conduct research on the latest permutations of the CIO role and technology trends. He said that customer crowdsourcing is a “hot topic” among his members, and one that we will surely be hearing more about from CIOs.
So I asked the very next CIO I talked to, Frank Wander, CIO of Guardian Life Insurance Company of America. And sure enough, Frank said that Guardian was hip to crowdsourcing — actually for some time now. While the company is not using a crowdsourcing platform or system to collect data, he told me that gathering input from customers has been part of Guardian’s product development process for years.
“Through sales, we’re always hearing what the customers are asking for,” and those ideas are incorporated in the development process, he said.
I’m wondering just how involved customers are becoming in the product design process — outside of software development. There are crowdsourcing vendors that will connect you with thousands of potential customers online for new ideas. But will we soon see a crop of crowdsourcing platforms that automate the collection of your own customers’ ideas?
It’s already interesting to watch the effects that the consumerization of IT is having on the way technology is now delivered to employees. Perhaps customer crowdsourcing will fundamentally change the way companies develop new products. If anything, it’s another opportunity for CIOs to foster and automate such a process, and directly contribute to the company’s bottom line.
Let us know what you think about this blog post; email Christina Torode, News Director.
The technology priorities of CEOs and those of CIOs differ greatly as those executives move into 2012. That difference is largely due to uncertainties surrounding the economy, a talent deficit, and fluctuating pricing for goods and services. Such was the buzz this week at the Gartner Symposium/ITxpo in Orlando.
Cloud computing, social media and mobility are top of mind for many CIOs, but CEOs are more concerned with traditional IT investments — think ERP and customer relationship management (CRM) — according to a Gartner survey of 220 CEOs employed by large organizations around the world.
“Mobile, social, cloud, and the nexus [of the three] — CEOs in midsized to large global companies don’t understand those words,” said Mark Raskino, Gartner Fellow in the research firm’s executive leadership and innovation group. “They do not volunteer terms like [cloud or social], and they do not understand how such concepts transform the fortune of their company.”
What these business executives do understand is that ERP helps them run the business and CRM helps them win new customers, Raskino said. In fact, anything related to customer wins is the top priority of the CEOs surveyed.
Another discrepancy in terms of priorities? Talent. CIOs are not very concerned about a talent deficit, while CEOs list it as a top concern. “Even though it may not be a top concern for you, it is for your business leaders and you need to be aware of that,” Raskino warned CIOs. CEOs are concerned that too much talent is tied up in a few midrange experts who do most of the work. They would like to see this talent spread out more across the employee base, and technology is one way of making that happen, he said.
The good news is that boards of directors’ expectations of IT are rising, and they are putting that focus on the CEO, who will need to work hand-in-hand with the CIO to figure out how technology will provide a competitive advantage.
“Board members are not saying, we need more social and mobile; but they do have a sense that IT is what helped us become more productive following past recessions in the ’80s, ’90s and 2001,” Raskino said.
Here’s a rundown of CEO top technology priorities for 2012:
- Specific business-line applications.
- E-commerce expansion.
- General IT modernization.
- IT infrastructure improvements.
- Business mobility as it relates to major platforms.
- Business intelligence.
- Supply chain management.
Yet another discrepancy? Business intelligence often ranks among CIOs’ top priorities in Gartner surveys, but BI technology was much farther down on the list of CEOs’ priorities.
In the end, CIOs need to help CEOs recognize the need for such newer technology concepts as the cloud, mobility, grid computing and business process reengineering, Raskino said. IT executives have to do this because they are the ones who will make it possible for their businesses to increase productivity, create growth and help solve our economic problems.
Now, it’s rare for me to hear something at an industry conference that makes me freeze in my seat, hold my breath and hope to hell no one notices I’m taking notes. But that was the case at this conference’s CIO Town Hall on mobility, where the audience was encouraged to talk about issues related to mobile computing.
For talk they did — about the financial costs associated with “bring your own device” versus company-owned mobile devices, for example. About disaster recovery for mobile devices. About the relative merits and shortcomings of the mobile device management vendors out there. (P.S.: Just because your name is Good doesn’t necessarily mean everybody thinks you are.) Whether virtualizing desktops is the answer to making mobility work in the enterprise. Whether it is the CIO’s job to give employees the device they want.
Click on the links and you’ll see that these are issues we’ve tackled on SearchCIO.com this year, as mobile computing is reshaping — at warp speed, it sometimes seems — how IT provisions and supports the technology employees use to do their jobs. But let me tell you, it was edifying to hear first-hand, nuanced accounts from CIOs across many industries about these topics and other problems we haven’t even considered — it was eye-opening, actually. People were not afraid to raise a problem and say they didn’t know how they were going to fix it. When Gartner Inc. says it’s early days for mobile computing, it’s right. The CIOs’ concerns revealed how few standards and best practices currently exist for managing the growing portfolio of consumer devices that are taking over enterprise computing. My promise is to keep tackling these problems one by one, in as much depth as possible.
Now, about the man in the uniform. I was too far away to see a nametag. I wouldn’t give his name anyway, given what came out of his mouth. Let’s go to the tape: The new chief of staff for a branch of the military came in with an iPad and wanted to use it. And so, the security folks for this military service decided to show him how unsecure it was. They hacked his iPad and were able to see a classified document on his desk through its camera. That woke him up, the man in the uniform said. He passed it along as a useful bit of intel for CIOs for when their CEOs demanded iPads.
On another note, I had a birthday yesterday, one of those ones that husbands can’t ignore, so my spouse dutifully stepped up. Guess what I got? Fortunately (or unfortunately for my career as a news reporter), I don’t have any secret documents on my desk.
Although security and compliance are the risks IT professionals point to first when they’re asked why they have bypassed cloud computing, bigger issues loom. Vendor lock-in and interoperability are what you really should be worrying about, according to cloud users and cloud providers at a cloud computing summit in Burlington, Mass., yesterday that was put on by the Mass Technology Leadership Council.
“This is a big issue in cloud. I would caution everybody in this room, as a potential Internet service provider or as a consumer, not to get caught in this trap, because what is going on here is that everybody is creating their own standard for what the cloud stack looks like,” said Michael Skok, general partner at North Bridge Venture Partners in San Mateo, Calif., referring to findings from interviews with some 400 high-level IT professionals and IT vendors. His prediction?
“I think you will see efforts like the OpenStack initiative become more popular, or you’ll see de facto standards coming from players like Amazon. But you’ve got to watch for this, because it is not going to be easy to navigate as we work towards these standards that are emerging.”
Now, it just so happens that North Bridge Venture Partners is an investor in two successful young cloud-based computing companies that have bent over backwards to make the issue of vendor lock-in and interoperability moot. One is Acquia, the commercial open source software vendor for the Drupal open source Web development platform. Drupal is used by some of the biggest and busiest websites in the world, among them the White House and the Al-Jazeera network. Acquia’s cloud infrastructure and services help these users manage, monitor and scale their Drupal platforms. The other company, Demandware, is an e-commerce software technology company whose customers include Lands’ End, New Balance and Barney’s. Demandware provides a Software-as-a-Service/Platform-as-a-Service offering that lets retailers control “everything about their Web and mobile presence,” CEO Tom Eberling said.
To address fears over vendor lock-in, Acquia, for example, offers something its coined “open SaaS,” said Chris Brookins, vice president of engineering and product management. “It’s not just about being able to get access to your data — which there has been a lot of talk about, with Facebook and Google — but it is also about the freedom and ability to leave our SaaS at anytime. You can take not only your code that powers the site, but the database; all your files; and effectively, if you feel too constrained by the SaaS, you can leave and host it yourself, hopefully on our PaaS,” he said.
A risk? Sure, Brookins said, when I caught up with him after the panel. But one that has paid off handsomely: “What we have found it that by eliminating that barrier to adoption — that fear that I might be locked in forever — we’ve had significant growth.” The company hosts 60,000 sites and enjoys 100% year-over-year growth. It also apparently offers a product that’s hard to refuse: Metrics show that even when customers leave, they are back in about a month.
“Our value proposition is: how do we effectively run their sites, scale their sites and add features at a pace that they couldn’t possibly do themselves for them –and, in way that they have the upside value but they don’t have any of the fear,” Brookins said.
What their answers came down to was that employee and customer expectations are changing and that in turn, the business has to change. Customers have come to expect Web-based services, and they want them now. That means that IT has to swap out older systems and business processes quickly. Employees don’t want to wait four years — or even four months — for new features and fixes to be rolled out. It’s about giving the business a competitive advantage through faster IT deployments.
If that isn’t enough to convince you, Alex Adamopoulos, CEO at New York-based Agile consultancy Emergn, whose clients include British Airways, British Telecom and Standard Life, has five more reasons for adopting Agile practices:
- To stop project paralysis: Agile translates into faster feedback and faster delivery. That means that IT delivers projects that keep up with the pace of the market and customer expectations.
- To accommodate change: Plan for change with Agile, instead of protecting the process and focusing on mitigating the risk of inevitable change.
- To make room for innovation: Agile allows for employee creativity and better idea management, which is often stymied by heavier processes.
- To improve the work environment: Agile enables companies to invest in their people and to “up-skill” them. As a result, Agile leads to happier, more productive employees who in turn feel more passion and ownership towards their work.
- To give the businesses transparency and control: Agile lets businesses identify where the greatest value exists in the organization’s portfolio of projects. Thus, Agile improves overall quality in delivering any type of project in the organization (IT or business related).
Let us know what you think about this blog post; email Christina Torode, News Director
I’m used to working from anyplace and (sigh) anytime. Getting to work usually involves guzzling coffee rather than driving my gas-guzzler to the office. But I am employed by a publishing company that was born in the digital age and produces content for online consumption. When a business the size and maturity of Kraft Foods ($49 billion in revenue, 108 years old, operations in 75 countries) decides that it’s in the company’s best interest to untether its employees with mobile devices and virtual communities, how we work in the digital age is no longer about some future state of knowledge workers. It’s mainstream.
If you have any doubts, this maker of real things (Oreos, Oscar Meyer hot dogs, Trident and Tang) is trying to turn this digital state of working into a commodity with its own internal brand name and slogan — as you’ll read about in my story next week on SearchCIO.com. Roberta Cadieux, director for information systems service delivery at Kraft, recounts the IT department’s efforts to harness the mobile gadgets and ubiquitous networks that employees increasingly take for granted into a coherent IT-business strategy — and the difficulty of selling the strategy (as opposed to the gadgets) to employees.
The transformation of how work gets done at Kraft extends to its physical offices, where “open innovative spaces” are replacing traditional cubicles and offices. The rank and file no longer are assigned desks. Employees can work from wherever when they are in the office. Wall-huggers — people who have worked at Kraft for years and feel they’ve earned the right to a corner office — have been given glassed-in rooms — fishbowls — but the occupants are increasingly “being challenged why they need them,” Cadieux said. Persuading people to change how they work has been hard, she added — so much so that she said she would like to go into the change management field.
One of the aspects of Cadieux’s job that does not get much play in my upcoming piece is her involvement with Kraft’s facilities people. She told me she worked hand-in-glove with Steelcase, the office furniture giant, to design the space, even walking into the office on Fridays to see how many people were there (usually almost half empty). As Cadieux was telling me about working with office designers, it occurred to me that one interesting spin-off is that IT will play a bigger role in the design of not only the IT architecture but also the physical space that employees inhabit.
Neil MacDonald wants you to stop worrying and love cloud service providers.
This Gartner Fellow is putting in a tall order. Look at any survey of CIOs and IT professionals regarding cloud computing, from its buzzy emergence up until, oh, this morning, and you’ll find that cloud security concerns sometimes outweigh all other cloud concerns combined.
For one, in a recent CompTIA survey of 500 IT and business professionals and 400 IT firms in the United States, 65% of respondents said that security is the area of cloud computing most in need of clarity.
To these folks, MacDonald says, Get a grip — or better yet, let go.
The big cloud service providers think differently about information security — and that’s a good thing, MacDonald told a virtual audience of CIOs and other IT folks during a recent Gartner webinar on cloud security. When it comes to information security, anything you can do, cloud can do better. Or soon will, he said. How exactly are cloud service providers better than you at information security? According to him, here are the new and improved ways big-name cloud service providers like Google, Microsoft and Salesforce.com think about security:
- They assume machines will fail, so they focus on resilience. “That’s their focus, it’s a delivery of an outcome independent of failure of the individual elements,” MacDonald said. “And that is quite a change in mind-set from traditional IT operations and IT security, where we try not to have any breaches or any failures.”
- Their security is baked in, not tacked on. Be it the shift from mainframe to distributed computing or from PCs to networks, security has always been an afterthought on the part of the provider and the user — until now.
- They have shifted to software-based, automated security controls. Most security issues can be traced back to human error, but automation eliminates the possibility while freeing up security professionals to focus on “the higher priority” of creating security policy.
- They take more responsibility than many of your other vendors for delivering outcomes. If you’ve never looked at the end-user licensing agreement for, say, Microsoft Exchange, here’s the short version: Install at your own risk; it might work, it might not. The online service-level agreement looks a little different: It promises 99% uptime or you get a 25% credit.
- They force users to think about outcomes. Fixating on “the bottom of the stack” — hardware, networks — is more about the illusion of control than real security. The focus should be on the top of the stack.
- Their offerings tear down IT silos. Network, storage, server and desktop can organize around security, retaining each group’s skill sets and enhancing agility.
- They employ better people and deploy higher quality controls. Does your on-site data center have palm readers or retina scanners at its entrances? Didn’t think so.
- They embrace change. Most IT folks hate change, especially in the form of patches and updates. Cloud service providers embrace it.
- They view security as an adaptive service. Rather than a set of silo products, it is delivered as an on-demand set of services.
The thing is, though, not every cloud service provider is Google or Microsoft. Not every data center is going to be built on its own island. It’s vital to ask probing questions and create a strong RFI or RFP. Chief among your inquiries, MacDonald suggested, should be not just how your data is protected and how it is segmented between fellow cloud-dwellers, but also who has access to it. (Will you trust your cloud administrator?) A lot of innovation is happening with data encryption in the cloud, he said, that might allow you to hold the keys to your information instead of an unknown admin. Don’t be satisfied with answers alone; ask to see the evidence. And while they probably won’t tell you, it wouldn’t hurt to ask, “Where is that island, exactly?”
Being that this was an online chat, there was no way to gauge audience reaction, so I’m wondering what you think. Does the idea that cloud service providers are approaching security in a different way change your thoughts about cloud computing? I’d like to hear your thoughts.
Let us know what you think about this blog post; email Karen Goulart, Features Writer.
Sometimes considered a Wild West approach to project management, Agile methodologies in actuality can create order, not chaos. The key is being clear on what Agile means at your organization.
Take the example of General Electric, which had too many software development approaches across GE Energy. When Agile was introduced, detractors complained it would be a “willy-nilly” approach, versus a familiar structured approach, such as waterfall, explained Paul Rogers, executive manager of GE Energy’s Software Solutions Group (SSG).
However, as Rogers explained at the recent Forrester Research event in Boston, Agile practices brought order to GE’s SSG by getting teams across the organization on the same development page, following one documented and governed methodology.
“In waterfall, it appears that you’re going from step to step. The product requirements document is created and sent to the technical requirements folks. They decompose it and send it to the coders. The coders send to it QA/QC, and you get the perfect product at the end,” Rogers said. “The problem with that is that with each handoff there is a different interpretation of the specs down the line.”
That’s a pretty unpredictable development process, he said, and the main reason SSG opted to make Agile the official methodology. All SSG employees were required to learn the GE-branded curriculum and become certified in the same Agile methodologies. The GE-branded part is a key point, since a lot of people have a different opinion of what Agile is and is not, he said.
The BPM approach
Taking the guesswork and, yes, chaos out of project management can also be achieved by using business process management (BPM) software to introduce Agile methodologies.
When a new product or service is being considered at a company, BPM identifies which processes will be affected. If changes need to be made to a process to accommodate a new product or service, it can be done quickly. Also, if a business process can not be changed — for example, a given process may protect the organization from violating a regulation — then the decision can be made on the fly not to change it.
“Being able to identify how business processes may need to change and who in particular needs to make that change, versus getting 100 people involved to see if a change might violate a standard or regulations, allows [project] teams to be Agile and flexible, and recognize where Agile is not possible,” said Mathias Kirchmer, executive director of Accenture’s BPM practice.
Yet another example provided at the Forrester event of Agile methodologies reining in a major project was Dan Simpson’s business transformation effort while CIO of Physicians Mutual (he joined Trustmark as CIO this month).
As Simpson told the audience, he was brought in to get rid of legacy systems and create a new set of modern services focused on customer needs and buying habits. His go-to solution was SOA. In the end he created services that could be reused time and again when a new application or service was called for by the business or customers. The main benefit? He delivered on his promise to create a single information view for the customer … and introduced Agile methodologies in the process.
“We decided to implement close to 40 new projects as part of the business transformation effort over a period of years,” Simpson said in an interview with SearchCIO.com. “Iterative development using Agile methods was our ’Agile version‘ for those projects. [That iterative method] was how we determined if user requirements were actually being understood during the development process, rather than us implementing something and finding out users aren’t satisfied.”
Agile saved them a lot of grief in terms of having to correct mistakes and redirect projects.
One takeaway from both Rogers and Simpson? Agile methodologies are going to vary from company to company, but you need to come to an agreement as to what Agile means in your particular situation — then document it, educate everyone and stick to it.
When asked, “Are you better off than you were three years ago?” most IT organizations answer in the affirmative. IT budgets, hiring and salaries are on the rise at the majority of companies, according to the latest annual CIO survey from the Society for Information Management (SIM).
In 2009, more than half of organizations surveyed suffered budget cuts. In 2011, however, 56% of IT budgets increased, a healthy percentage compared with 2010, when 34% of organizations saw their IT budgets go up, and to 2009, when 25% of organizations reported IT budget increases. These results are based on SIM interviews with CIOs at 275 organizations in late June.
“It’s probably the biggest jump I have ever seen, and puts us back at pre-recession levels,” said Jerry Luftman, distinguished professor at the Stevens Institute of Technology, who conducts the research for SIM’s annual benchmark.
IT leaders expect the positive trend to continue into next year. Despite talk of a double-dip recession, 84% of the CIOs surveyed expect 2012 budgets to equal or exceed 2011 levels. In one area, IT budgets did decline in the 2011 CIO survey: The percentage of corporate revenue allocated to IT dropped from 3.8% in 2010 to 3.5% in 2011. Luftman has attributed the decrease to a rise in corporate revenue last year and to the historically high percentage of corporate revenue allocated to IT over the past three years — which, at nearly 4%, was well above the average 3.6% of the past six years.
On the hiring front, turnover remains quite low, at 7%, partly because retirement-age boomers can’t afford to retire and partly because there are fewer job openings for senior-level positions, Luftman said. CIOs tell him that when an experienced staff member does retire, they are using that senior-level salary to hire two “newbies,” who cost less and often come in with the newer skills and technology expertise CIOs need. On the bright side, however, overall spending on salaries is trending up:
- IT staff salaries increased at 66% of organizations in 2011 compared with 2010.
- 67% of organizations expect staff salaries will go up again in 2012.
BI a hard nut to crack
Given their plushier budgets, what are CIOs spending money on? Business intelligence (BI) outstripped cloud computing; ERP systems; mobile and wireless apps; and customer relationship management, or CRM, systems as the top technology investment by CIOs in 2011, according to the survey — and by a long shot.
“BI was a standout — it was 50% higher in the rankings than all the others, which were relatively close in ranking,” Luftman said.
But it appears the upstarts are poised to give BI a run for its money. Mobile and wireless apps took fourth place, up from ninth last year and 13th in 2009. Cloud computing occupies second place, up from fifth place a year ago and 17th place in 2009, the year it made its debut on the SIM survey. The wide disparities in the amount companies are investing in cloud, however, show how nebulous this new computing model remains, Luftman said:
- 20% spend more than 10% of their IT budgets on cloud.
- 21% spend between 1% and 10%.
- 43% are doing nothing with cloud.
In one respect, BI’s top standing in the SIM survey is no surprise. The technology has ranked first or second on the SIM list of the top five CIO investments since 2003, Luftman said. The reasons for the heavy investment in BI, however, keep changing, he added — a mark of just how hard it is to extract potentially valuable insight from the reams of data collected by businesses . “Initially, BI ranked high because of the complexity of getting your databases in order,” he said.
As organizations have mastered the technical challenges of their BI investments, they have recognized they don’t have the talent to support the technology, Luftman said. “You can’t throw a tool up and expect magic to come out.” The portfolio of required skills goes beyond understanding databases and the way the technology works (important as that is) to include statistical and in-depth business knowledge. People with that combination of skills are “few and far between,” he said. The large volume and the velocity of data generated by companies — Big Data — adds to the challenge. “It is one of the more complicated technologies that we have been engaged in in perhaps in 50 years,” Luftman said — and SearchCIO.com can attest to that in our coverage of Big Data.
CIOs still have serious worries. Of the Top 10 IT management concerns of 2011, the first four focus on using technology to help the business compete. IT and business alignment claimed the top spot in 2011, followed by business agility and speed to market. Reducing business expenses through business process management and re-engineering took the third spot; and increasing business productivity and cost reduction came in fourth. Rounding out the Top 10 management concerns, in order, are these:
5. IT strategic planning.
6. IT reliability and efficiency.
7. Enterprise architecture/infrastructure capability.
8. Security and privacy.
9. Revenue generating IT innovations.
10. IT cost reduction.