Google’s decision this week to stop cooperating with Chinese government censors — and, quite likely, pull its business efforts out of China completely — has lit up the tech sphere, with people around the world debating the human-rights and free-speech elements of the Google-in-China decision. Remember, this is a company branded with the unusual slogan, “Don’t be evil,” and some of its users saw Google’s cooperation with Chinese censors as just that.
Given my recent work covering outsourcing and offshoring plans among enterprise IT organizations, the international element of this brouhaha speaks to the idea of U.S.-based businesses investing in business operations abroad, the due diligence that takes place in assessing IT outsourcing locales, and whether the business should be prepared to accede to the mores of its new base.
Relationship building is a key aspect of outsourcing arrangements. There are often language barriers, time-zone differences and cultural variances to consider, but these are sometimes forgotten as companies draw up outsourcing SLAs and haggle over IT pricing models. Whoever in your organization oversees IT outsourcing arrangements — whether it’s the CIO, procurement or another business executive — needs to know what the company is getting into when it strikes a business deal with a foreign partner.
In the past year, I compared the pros and cons of IT outsourcing in Asia and Latin America, including some of the sociopolitical considerations to take into account. Take these as guidelines, but remember it’s your responsibility to undertake due diligence and understand the inherent risks and rewards of individual offshoring vendors, to avoid getting caught in Google’s current predicament.
I want to say one word to you. Just one word. Are you listening? (No, not plastics.)
I’ve been checking in with CIOs and analysts, following up on our annual IT salary and career survey to get the real-time read on IT budgets and IT hiring for 2010 and heard a variation on the jobless recovery theme: Elasticity.
Actually, the word came from Jack Santos, a former CIO and research fellow at Burton Group Inc. (soon to be Gartner Inc.). Santos was focused mainly on the sharpened interest from his clients in elastic computing models like cloud services for email and cloud platforms for software development. The notion of investing millions of dollars from IT budgets in up-front capital for solutions that might not show a benefit until much later — or, worse, become irrelevant in a volatile economy — doesn’t sit well with CFOs these days .
“If the company suddenly sees an increase or significant decrease in business, you’re stuck with those sunk costs,” Santos said. Better to “pay by the drink.”
But paying by the drink is not just a big theme for computing, as the Great Recession continues to grate on budgets. The topic of elasticity also came up over and over on the subject of IT hiring in 2010. Many of the CIOs I talked to — both those who had suffered deep cuts to staff and those who did not — indicated they’re using the pay-by-the drink model for humans, too. If business picks up and some of those delayed projects are put into motion, they plan to fill in with consultants or staffing services.
That doesn’t surprise Jerry Luftman, who directs the information systems program at the Howe School of Technology Management at Stevens Institute of Technology. “It looks like spending on internal staff will go down, but spending on outsourcing will go up,” he said, referring to findings from the SIM IT survey of CIOs he conducts annually for the Society for Information Management.
And, Luftman added, if companies do hire, many of them will choose the “rent-to-buy” route, offered by those IT outsourcing vendors, rather than go out and recruit people on their own.
Is your enterprise organization incorporating elasticity into its IT hiring or budgeting?
IT and business alignment is a challenge with which CIOs struggle daily, and it’s bound to remain that way, with recent data showing that IT managers are predicting smaller budgets for 2010.
So what do you do when business department heads demand to know why IT requests made several months before are not in place by now?
You could take a page out of CIO Chris Brady’s playbook. All IT requests from business departments at Dealer Services Corp., a Carmel, Ind.-based financer of car dealerships, are funneled to Brady, who in turn enters them in a weekly report that is shared companywide. The requests are rated by IT and business managers, with those deemed more critical to the business placed higher in the queue, she said.
This process allows department heads and users to see where their requests stand and how the requests rank in comparison with others made that week. Department heads meet with IT weekly to discuss, or argue, about why their particular requests are lower or higher than others on the list.
“IT always suffers from the perception that requests go into this giant black hole, that there isn’t a firm timeline for projects and response times aren’t good enough,” Brady said. “We faced that more so this past year than others [because of the economy], but the report shows the departments that we have 2,300 [IT] requests right now, and here’s where your five stand.”
A weekly report is also sent out, listing all requests that have been resolved and added compared with the previous week.
Of course, this comes from a CIO who encourages all employees to email her directly with suggestions on any matter, and what it comes down to is a belief in transparency. Perhaps until IT shares information — such as how many requests it gets per week or a timeline of when it thinks staff will get to a given project — the business may continue to view IT as a black hole.
Email me at firstname.lastname@example.org to let me know if you’re trying to make IT more transparent or other ways you are tackling IT and business alignment.
I’m going to try something a little different here from now on. In addition to summing up the latest from content from SearchCIO.com on IT salaries, security, lesson for 2010 and more, I’m going to include some links to what people in IT are talking about this week. Feel free to chime in with your own thoughts and let me know what you think of this new format.
I never used to be a gadget geek, but I’m coming around. See what our sister site, SearchTelecom.com, has to say about the Google Nexus One smartphone and its effect on business models. Meanwhile, the Globe and Mail says that Google says its next version will be geared at enterprise smartphone users and might have a physical keyboard.
Speaking of gadget geekdom, I’m not in the market for a new computer, yet I’m salivating over descriptions of the rumored Apple tablet. Please, Apple, make this happen!
People are still buzzing over the Consumer Electronics Show in Las Vegas last week. You can follow #CES on Twitter for the continuing dialogue.
Finally, here’s what SearchCIO.com reported on last week:
Information security budget closest thing to recessionproof in 2010 — Information security budgets in enterprise IT organizations will remain robust in 2010 compared with other IT spending areas. Learn more about budgeting for IT security.
CIOs: Planning, no frills make disaster recovery plans recessionproof — In a year when economic risk overshadowed potential disasters, CIOs who launched DR plans considered costs from every angle. Here are some tips that can help you sell DR in 2010.
IT salary survey: How CIO, IT salaries vary by industry — The results of our annual IT salary survey are in, and IT execs in some industries clearly earn more than others. Which industry do you think comes out on top?
IT best practices in 2009: Lessons learned for 2010 — IT efficiency was driven by the economic recession in 2009, and enterprise CIOs will carry the lessons they learned into 2010. Get their IT best practices in this guide.
Instead of spending years developing an enterprise business intelligence strategy to consolidate BI tools and come to a corporate-wide agreement on key performance indicators, some enterprises are finding that an iterative approach at the departmental and business unit level is more effective.
For instance, a division of a global equipment provider to the pharmaceutical and bioscience industry turned to a SaaS BI provider to gather revenue and supplier metrics. This division wants a specific set of data and a relatively quick turnaround.
The company has many BI tools in place, but the division went with SaaS BI provider Oco Inc., because “Enterprise BI is too tough to tackle” said Mike Beckerle, Oco’s CTO.
Coming to a corporate-wide decision on the definition for one metric alone can be daunting.
Take a common enterprise business intelligence metric, customer profitability. On an enterprise scale, the definition of a customer will vary depending on which business unit you’re talking to, as will the metrics for deciding what should be measured to determine a customer’s profitability: How much does it cost to satisfy and support this customer, versus what they pay us in return, for example. That is one of many questions that can determine if a customer relationship is paying off.
Some argue that enterprise-wide definitions and metrics are unattainable. Not only because everyone has to come to agreement on what data should be measured, how it should be measured and who it should be measured by, but also because business goals and markets shift constantly, making a defined metric obsolete pretty quickly.
This is not to say that data should not be centralized or common BI goals are not being created across an enterprise, but I’m wondering if business units and departments are finding it easier and more productive to go it on their own. And if so, what ramifications will this have on an enterprise’s ability to discover cross-departmental patterns and achieve the ultimate goal of predictive analytics?
Let us know what BI path you’re on. Email me at email@example.com.
Welcome back from the holidays! I hope everybody had the chance to take some time off in the past week to spend with their families and loved ones. Now, it’s back to the grind! Here’s the latest content from SearchCIO.com:
Server virtualization and cloud computing carry savings into 2010 – Learn how a CIO saved more than $300,000 through server virtualization and cloud computing.
ITIL best practices and lessons for the new year – The value of implementing ITIL best practices is clear to IT, but not always to the business. Find out how some ITIL users increased ITIL adoption in 2009 and get tips for 2010.
As the new year rolls around, I want to thank all of our SearchCIO.com readers for your comments and contributions to our coverage of IT in 2009.
We, too, grappled with a “doing more with less” environment this year, and that meant your various forms of feedback — your emails, your blog comments and, new this year, your Tweets — were really integral to directing our writing and editing resources in the right direction. We hope that our coverage of ITIL and ITSM, virtualization, IT outsourcing, cloud computing, business continuity, BPM, PPM, IT cost management and more spoke to your needs as an enterprise CIO. As we continue in that direction, keep talking to us so our coverage of IT in 2010 meets your needs. Thanks!
Happy holidays, SearchCIO.com readers! I’m not sure how many of you are working this week, but I want to make sure you don’t miss the latest content we’ve cranked out in between taking some much-needed time off with our families!
FAQ: Next-generation business intelligence systems — Find out how CIOs are taking their business intelligence strategies to the next level with new approaches to gathering, accessing, measuring, displaying and sharing information.
SOA implementation and application integration: Test your knowledge — A SOA implementation allows communications between disparate services in an enterprise. Review our latest SOA stories and take our quiz and learn how to justify SOA to the business.
IT outsourcing in 2009 and beyond: Lessons learned for the new year — IT outsourcing in 2009 ebbed and flowed with the economic recession. What lessons did enterprise CIOs learn that they will carry into their IT outsourcing plans in 2010 and beyond? Read their advice here, and feel free to come back to the blog to share your comments.
The holidays are near! But don’t completely zone out of work yet — first, check out the latest content from SearchCIO.com, covering mobile BI app development, IT salaries and implementing an IT service catalog.
IPhone, need for features driving plans for mobile BI app development — Mobile applications for business intelligence is a gap that IT directors are charging their app development teams to fill as business intelligence and virtualization products bake.
IT salary survey: Half of IT executives expect pay increases in 2010 — Here’s who expects to get raises in 2010 — and how much — based on SearchCIO.com’s annual IT salary survey.
FAQ: Implementing an IT service catalog — An IT service catalog is a menu of services offered by an IT organization. Get the FAQs on how to implement an IT service catalog and automate the service request process.
I’ve been checking back with CIOs whose projects we profiled in this year of the Great Recession. Your mood, I’d say, is sober. Never mind about the familiar doing more with less mandate — one CIO told me he feels like he’s being asked to do more with nothing.
McKinsey & Co.’s annual IT survey of business and IT executives seems to bear this out. When CIOs and CTOs were asked how well their IT functions responded to the economic crisis, about 49% said their management of IT infrastructure was extremely or very effective — a decline of 13 percentage points from 2008. IT executives were down on themselves in other areas of IT operations, as well. Only 21% said IT was very or extremely effective in “driving technology enablement or innovation in business processes and operations” — also down 13 percentage points from in 2008. And only 21% said they were very or extremely satisfied with their ability to “target places in the organization where IT can add the most value” — down 10 percentage points from 2008.
Interestingly, non-IT executives were more satisfied with IT’s management of infrastructure — with 55% percent reporting very or extremely effective performance on IT’s part, up from 50% in 2008. Their satisfaction with higher-value activities, such as on-time/on-budget project delivery and “proactive engagement from IT,” was less gushing, hovering in the 30s, the report found. But significantly, their opinion of IT performance on these fronts was unchanged from the year before, despite all the economic turmoil and cost-cutting, according to the McKinsey survey.
On other fronts, the survey found that companies have a growing appreciation for what IT can do for it. For example, this year, improving business efficiency was ranked as IT’s foremost job in helping further the company’s goals, beating out “keeping costs low” by 12 percentage points. This suggests that companies’ reliance on IT to make business efficiency happen was more important to them in 2009 than in nickel and diming IT budgets.
That CIOs took a dimmer view of their ability to deliver in 2009 does not surprise. CIOs are hard on themselves — they have to be, because IT is complex. Letting up can bring down a company or a swath of the nation’s airports in seconds.
But the double-digit declines in satisfaction over IT’s effectiveness in enabling and innovating business processes and finding ways to add value to the business should be worrisome to CEOs who are pleased with what their CIOs are doing. A prominent recruiter we talked to recently said she is hearing from a lot of CIOs who, having stuck with their company’s during the downturn, now want to take their skills and savvy and move on.
This might be the year for CEOs to put something good under the proverbial tree for CIOs. And my yuletide greeting for CIOs? Chin up. You done good.