I spoke with Gartner analyst Dave Aron for my story today about the CIO role in a merger and acquisition. The topic seemed timely: A variety of reports suggest that corporate M&A activity is heating up, with the cash-rich players eager to buy the talent and products they need to compete effectively as the economy rebounds.
Aron is in the midst of updating a two-year-old study on the CIO’s role in a merger and acquistion, in particular, what distinguishes the successful from the unsuccessful CIOs in these high-stress situations. Of course, every deal is different, but Aron has discovered that many successful IT integrations follow predictable patterns. Here is the Gartner breakdown:
- 1. Hypothesis-driven planning phase: CIOs who play a meaningful role in M&As tend to form an early hypothesis about how the integration of the companies should go. Why? People are hungering for certainty in these situations. A CIO who can size up the acquisition and put forth a vision of what kind of integration would work best is a valuable resource.
- 2. Welcoming and signaling phase: This happens just after the deal is done “to wake everybody up to the new reality.” It might be that everybody gets their integrated phone numbers or badges or email accounts, Aron said. In this phase, IT moves quickly to let the acquired and the acquirers know that a new day has dawned.
- 3. Identifying early benefits from M&A: Just as it implies, this is when the IT department goes after the quick wins — be it presenting a single face to the customer, finding the cost savings in sourcing contracts or rationalizing regulatory compliance controls.
- 4. Main integration: One of the persistent myths of M&As is that IT integration has to be done quickly. Not necessarily so. It may be that it makes more financial sense to leave systems be (for a while). Rick Roy, CIO of CUNA Mutual, backed this advice up: “The first question if you are buying is always, are you going to integrate? Maybe not. In our world, we will eventually, but I will not touch infrastructure until well down the path of earn-out on the deal.”
- 5. Longer-term benefits: There are continuing benefits CIOs can help their companies wring from the deal, and it is the IT department’s job to find them.
An interesting coda: Positive uncertainty
The mantra that an M&A integration has to be done quickly may be outdated, but according to Gartner, that other mantra — make the tough decisions early — still holds true. Gartner found a lot of evidence that any kind of uncertainty, even “positive uncertainty ” (a situation where nothing bad is happening and there is a promise of good news) can really destabilize IT people.
I need to run that observation by an IT shrink.
It wasn’t called cloud computing services or Software as a Service (SaaS), but the concept was the same: Dubovik wanted to house resource, staffing and project management business process applications on someone else’s infrastructure. The in-house infrastructure for those processes was a mismatch of off-the-shelf and open source platforms, and he didn’t want to invest in a new infrastructure.
The real selling point for him back when he was the vice president of IT strategy for Digitas, an advertising agency that was acquired for $1.3 billion in 2006 by Paris-based Publicis Groupe, was not the ability to rent infrastructure and applications, however.
“[The service provider] truly became a partner — we could leverage their expertise, which was based on best practices gathered from their network of customers, and use them to improve our business processes,” he said.
The company that Dubovik outsourced his business process applications to was OpenAir, then known as a Web-based professional services automation platform. OpenAir was acquired by NetSuite for $26 million in 2008.
Dubovik is no longer with Digitas. He’s now the vice president of information technology for Boston-based private equity firm Audax Group. And he is no longer quite as enamored by what are now called cloud computing services.
“What we were buying back then [from OpenAir] was not just the technology, but resources we could use to solve a business problem. I don’t know if I can say that holds true for all the SaaS plays now,” he said.
I have heard IT executives describe Salesforce.com as a player that solves business problems, and even creates new business, but I’d like to hear about other, not-so-famous SaaS, cloud or whatever you want to call them, players that you consider more than a place to rent space.
Gartner’s BI Summit is just around the corner, and I’m eager to see how attendees’ business intelligence strategies and priorities have changed.
When I went to the show last year, a big topic of conversation was the disconnect between IT and the business, and an overall lack of governance over the business intelligence strategy.
Attendees were trying to figure out how and if they should consolidate business intelligence software, how to get the business side to stop using Excel — or keep Excel as a front end and tack it onto a central BI platform.
Later in the year, I attended BI software vendor Information Builders Inc.’s user show, in which attendees had a very different set of BI strategy priorities: real-time data analysis and predictive analysis.
I think all of those topics will still be areas that CIOs are tackling, but if the Gartner BI Summit agenda is any indication, BI strategies are shifting yet again.
One session, “Turning BI from a cost center into a revenue generator,” is somewhat of a Holy Grail of BI for the business and IT. How Gartner advises getting there will be interesting to hear.
Then again, one speaker planned for the Gartner show, Rita Salam, research director at Gartner, is pointing to collaborative decision making as the Holy Grail of BI.
Another topic sure to gain attention, as it did at last year’s show, is Gartner’s take on where the big BI vendors need to improve and where they excel. Check out what Gartner analysts had to say about the major BI players last year in “Business Intelligence vendor comparison: Gartner analyzes the big four.”
I’ll be sure to lay out the big BI vendors’ pros and cons as Gartner sees it this time around, and go on a search of my own for what attendees believe is the Holy Grail of BI.
It’s another soggy Monday in the Northeast. Stay inside and catch up on the latest tech chatter and most recent stories from SearchCIO.com!
My colleague, Kristen Caretta, reported on this on the CIO Symmetry blog last Friday, but the race for Google Fiber is really heating up. According to BusinessWeek, 600 communities are competing for the honor of being Google’s broadband test subject.
And, from SearchCIO.com:
IT in 2010: Keeping up with the latest IT management trends — Running IT in 2010 requires CIOs to consider IT Service Management methodologies, vendor contract renegotiations and investments in new technologies. Have you kept up with IT management trends? Also, check out our CIO self-assessment guide for this and other IT management trend quizzes.
Enterprise desktop virtualization design and testing best practices — Getting the design and user-testing stage right is critical to developing an enterprise desktop virtualization strategy.
A CIO’s tough-love approach to IT transformation — For Boston Scientific’s CIO, the first step in IT transformation and making IT into a business partner was to tell his managers they weren’t as good as they thought they were.
How’s this for IT innovations that make cost-cutting a breeze? Wisconsin Public Radio is reporting that the University of Wisconsin-Green Bay has switched the default font on its email system from Arial to Century Gothic.
Doesn’t sound like a big deal as far as IT innovations go, does it? But the school’s director of computing, Diane Blohowiak, says it will save money on ink when students print emails. How much money? The new font uses 30% less ink than the previous one — which really adds up when you consider that the printer ink the school uses costs about $10,000 per gallon, she said (which sounds high, but I’m not in the ink-purchasing business — wow).
Who would have thought a minor change could save so much dough? I repeat: Who would have thought a minor change could save so much dough?
And there you go. I hope you can see on your screen that the second font is skinnier than the first, yet you can still read it, as I’m sure University of Wisconsin students can when they print out their emails — and as I’m sure millions of office workers could, if their IT departments were to make such a switch.
We’ve been running a series of stories on IT innovations on SearchCIO.com, and they carry some excellent advice — whether it’s transportation leader Amtrak’s approach to different types of transformation or oil giant Chevron Corp.’s “innovation zone” designed to get creative juices flowing. And of course, in this recession we have written a lot — a LOT — about cost-cutting strategies. In those stories, CIOs have made it clear that cost-cutting is always a balancing act and they try to make the tradeoffs as painless as possible.
The Great Font Switcheroo of 2010 serves as an excellent reminder that IT innovations can — and should — go beyond zeroing in on the highest cost centers. Sometimes, it’s as easy as slimming down in barely perceptible areas.
Have you made a small but effective switch like this in your IT organization? Please brag about your IT innovations below!
I recently was asked to participate in a panel discussion about the importance of communication in IT innovation at the Olin Innovation Lab, an annual event at the Olin College of Engineering in Needham, Mass. Innovation means something new. There is probably more change — more “new-ification,” if you will — going on in information management and IT than in any other part of the business. In fact, I realized that for most CIOs, IT innovation is not a eureka moment but more like a standard operating procedure. Because IT is always changing, IT innovation is actually a pretty mundane part of the job for CIOs. You deal with it every day.
In preparing for the panel, I also realized that in the five years I have been covering CIOs, my own idea of innovation has changed. A word that I used to think had to do with some brilliant moment of artistic revelation or scientific revelation, now for me means something that is really part of a process. In fact, many companies I have talked to recently have begun to divide innovation into categories. Chevron is an example. It has occurred to me that each category calls for a different set of communication skills.
Selling IT innovation, listening and talking at cross-purposes
These innovation levels, of course, differ from company to company. I won’t go into a lot of detail, but here’s a sketch of three levels of innovation and the three types of communication each requires:
1. The first level of innovation is what I have dubbed “new for you,” or innovation by replacement. Here, the innovation is new for your company — for example, switching to a different email system to take advantage of a technical advancement or cost savings — but not new to the world or indeed to many other companies. Selling the value of the change is the critical communication skill here. (If you don’t, expect a lot of grousing.)
2. The next level up — and a more difficult type — is innovation that transforms the way work is done at your company: e.g., putting a process that involved humans, computers and perhaps off-site systems onto a digital “conveyor belt” so that this digital media can be accessed from multiple computers in multiple places. (Amtrak CIO Ed Trainor calls this IT transformation with a “big T.”) You have to understand the existing process well enough to change it, and that requires talking to a lot of people. So, while you also have to sell the value of change, the critical precursor to selling is listening.
3. The third type of innovations is those eureka — new to the world — inventions that change the way everybody works. Email was that. Smartphones. RFID. If you were lucky enough to be involved in one of these super-transformative innovations, you knew things that people in your industry didn’t ordinarily know. That kind of inventing requires hearing about many ideas: listening to people you wouldn’t ordinarily talk to, maybe even talking at cross-purposes. It requires a willingness to communicate outside your comfort zone.
Has your company developed a process for innovation? Also, if you’ve come upon a new way of doing things by connecting the unconnected, I would love to hear about it.
A while back, I wrote a story about a new IT management framework under development called the IT Capability Maturity Framework. The goal of this framework is to give CIOs a one-stop shop for measuring all IT processes, while at the same time proving the value of IT to the business.
The framework involves measuring a company’s capabilities across 36 processes that fall under four management categories:
- Managing IT like a business by evaluating such processes as IT governance and business process management.
- Managing the IT budget by rating processes such as portfolio planning and budget oversight.
- Managing the IT capability across process areas like enterprise architecture and research and development.
- Managing IT for business value in such process areas as total cost of ownership and investment analysis and performance.
What one reader quickly pointed out was that even this framework, meant to fill in the gaps in other IT management frameworks such as ITIL and COBIT– as explained by those who developed and are using IT-CMF — had an obvious gap of its own: None of the 36 processes addressed security.
I’ve heard that each framework lacks something. One IT management framework may be well suited for risk management but not IT governance or IT operations management, or strategic planning.
The bigger question, I guess, is not what’s missing, but how can CIOs fill in the gaps? Are they finding that they have to use several IT management frameworks? Are they picking and choosing aspects of several frameworks that suit their organization, and does this type of approach work?
One expert advises choosing individual processes within a given framework such as ITIL, rather than taking on the entire framework, to realize the most bang for your buck and buy-in from the business. After all, putting any type of framework in place is no easy task from a cost , time or cultural perspective, so perhaps a selective approach makes sense.
Like many of you, I’m caught up in the passage of health care reform here in the U.S. If you’re interested in the health care system dovetails with your interest in technology, be sure to check out our new sister site, SearchHealthIT.com.
This piece on national cybersecurity by city fascinated me. Who would have thought Seattle would be the riskiest city for online transactions? I can’t say I’m happy to see Boston (my hometown) at number 2 on the list. And while Detroit has been very hard hit in this recession, at least it’s one of the safest cities in these national cybersecurity rankings.
For those interested in both basketball and technology (myself included), I really enjoyed this article on potential high-tech innovations in the NBA. Think LeBron James crossed with “Avatar.” Now, can I get some reliable basketball technology to fix up my NCAA bracket? Because it’s a mess…thanks a lot, Kansas.
What else are you reading? Send me a link. And if you’re looking for something to read, why not head over to our most recent stories from SearchCIO.com?
Innovation strategies: IT transformation is on track at Amtrak — Amtrak’s CIO talks about his approach to large- and small-scale business and IT transformation.
Building IT business value, one word at a time — How did Northwestern Mutual’s CIO change his IT department from an unappreciated service provider to a business asset? By making his staff speak the language of IT business value.
CIO drives IT business value with new perspective on processes — How can CIOs help their companies get a return on IT investments? By putting new processes and frameworks in place aimed at driving IT business value.
What are CEOs looking for in a CIO? According to headhunters at the Boston Society for Information Management (SIM) annual meeting last night, CEOs are saying they need someone who can speak the language of business and interact with business peers — a business partner, said Jamie Satterthwaite, managing partner and head of the east coast technology practice at Egon Zehnder’s Boston office.*
The word leader comes up a lot when CEOs are looking to fill the CIO role, said Mark Polansky managing director of the information technology officers practice at Korn/Ferry International. And by that, Polansky said, CEOs mean people who “can hold their own and show the courage and conviction for making IT as good as it can be.” Other buzzwords du jour for the CIO role? Transformation and innovation, offered Phil Schneidermeyer, partner at Heidrick & Struggles.
Someone in the audience sagely asked who out there is actually living the role of the innovative, transformative, courageous CIO, but the headhunters — amusingly — sat there, silent. Finally, one of them said FedEx CIO Rob Carter and his trusted partner Sherry Aaholm, executive VP, information technology.
As for getting on the radar screen of the likes of Polansky, Satterthwaite and Schneidermeyer, it seems a phone call will not do. Polansky, for example, is too busy to take phone calls during the day, but he has an hour commute to and from work to field messages and a device that lets him vet emails until his thumbs are numb when he’s airborne. Going to events like the SIM conference is good, they said, provided you have your “elevator pitch” polished and be certain to follow up with a resumé. Once you’re on their radar, if you do get a call from one of them, be sure you take it, “because we will not call you again,” Polansky said. And if you don’t want the job, a referral would be much appreciated.
An unemployed CIO in the SIM audience — a “gray hair,” as he said — wanted to know if he should take a lesser CIO role or hold out for the job that his “vast amount of experience and accomplishments” qualified him for. He was told by the panelists that it is not just the “gray hairs” that feel discriminated against in the current job market. “Unemployment is equal opportunity,” Polansky said. The advice: The job, no matter the title, needs to be challenging. One of the best things he could do for himself? Get away from feeling picked on.
Look for my story next week on what CIOs — employed ones, too! — should be doing right now to ensure their next employer will come looking for them.
* Satterthwaite disclaimer: “Most CEOs don’t have any idea what they are looking for in CIOs.”
As I’ve stated previously on this blog, public-sector technology stories hold particular resonance for me, given my background in community journalism. And, as my colleagues and I gear up for some increased cloud computing coverage, Karen Wilkinson’s posting on the Government Technology Web site about cloud computing in the public sector grabbed my attention.
Utah CIO Steve Fletcher, who pushed the state into starting a private cloud for e-mail and Web applications, said that agencies should consider four main points before pursuing cloud applications:
- Data ownership
- Disaster recovery
When it comes to the cloud, officials often have a lot of compliance-related concerns. For example, officials in Los Angeles considering whether to switch email services to Google’s Gmail asked who would be able to see the information transferred via the new service. To resolve the concern, the contract clearly stipulates that Google employees cannot read the e-mails they manage, said Kevin Crawford, assistant general manager of L.A.’s Information Technology Agency.
A lot of organizations turn to cloud applications to achieve cost savings or to move on from out-of-date legacy systems, but public agencies need to be especially patient about achieving ROI. Success is often measured in terms of more efficient internal operations that lead to smoother interactions between the public and the agencies, not only in dollars and cents, Crawford believes.