It would be suicide for a CIO to go to the CFO or CEO and say there’s no real return on our technology investments. But according to one industry expert, it’s the truth.
“If you just make a technology investment and don’t change the way you’re doing work, there’s no return on it,” said James Champy, author and chairman of consulting for Perot Systems Corp. during a recent interview at the MIT Sloan CIO Symposium. “The ROI doesn’t come from the investment in pure technology, but from the change in the nature of the work.”
According to Champy, the only way to measure the success of a technology investment is not through ROI, but through the realized improvements in business performance. And in the end if you have a dramatic improvement in business performance, you usually have a significant ROI from your technology investments.
So what’s the best way for measuring business performance and communicating the role technology plays in its success?
Many companies use BI scorecards and dashboards as a formal means for measuring business performance in the enterprise. These types of tools allow companies to use data in a more productive way and better align technology goals with the needs of the business.
As far as communication goes, you should “go to your company executives and tell them ‘here’s a way we’ve used IT to get a product to market, or respond to a customer call the day it comes in, or reduce the cost of a process by 50%,'” advised Champy. These types of “wins” are great examples to show the business executives how work has been significantly improved by technology investments.
And that’s where the real ROI really comes in – in the improvement technology investments make to business performance.
My story this week on the University of Utah’s project and portfolio management (PPM) program stood out from other PPM pieces I’ve reported because, in this case, the portfolio piece of the program got top billing.
The University of Utah categorized its IT initiatives across the university into 11 portfolios, in areas ranging from “architecture and security” to “instructional” and “user experience.” The entire program (which followed a campus-wide IT centralization effort) was completed in 10 months. Now, projects must go through the strategic portfolio process to be approved; it’s not longer a case of “whoever yells the loudest gets their money first.”
As we noted in the story, new SearchCIO.com reader research on PPM found that only 37% of 304 enterprise organizations define PPM as an enterprise-wide discipline used to select and prioritize investments in different parts of the company, including IT. The others use PPM only in IT (31%); don’t have a PPM practice at all (28%); or have one only outside of IT (5%).
It was also striking how that second “P” in PPM played such a huge role for the Salt Lake City-based university. A lot of organizations use PPM software mainly for project management and prioritization; the “portfolio” aspect doesn’t tend to play a big role. In our survey, 42% used PPM software, and of those, only 30% deemed portfolio management as a “very important” feature in PPM software system selection.
It sounds like this “portfolio first” approach at the University of Utah was a huge success. I’m told that an educational facility doesn’t necessarily view ROI in the kind of dollar terms other organizations do, but that they’re seeing results nonetheless. Resources (i.e. people) are being better utilized and the right projects – benefitting the university as a whole – are being completed in a timelier manner.
So why don’t more organizations focus on portfolio creation and management in PPM software purchases and planning? I’d be interested in hearing your organization’s rationale in the comments section below, or e-mail me.
“There’s no reason for us to be intimidated at all by what is happening in California,” Patrick said in a speech to business and technology leaders gathered at the Microsoft offices in Cambridge, Mass.
Patrick said that up to $1 million could be made available to a startup that agrees to base operations in the Commonwealth, create a minimum of five jobs in the first year — and that had appropriate work permits in the U.S. Each startup must also gain matching funds from an outside investor.
The MassChallenge Venture Funds Competition (MVFC) is modeled upon the annual business plan competition held Cambridge’s Massachusetts Institute of Technology, and offers a similar amount of seed capital: $50,000 in cash for the launch of the business. The competition will be financed through a combination of public and private funds. Microsoft, Gururaj “Desh” Deshpande (co-founder and chairman of Sycamore Networks, Inc.), the Ewing Marion Kauffman Foundation and The John Adams Institute serve as initial founding sponsors of new $1 million startup competion.
Should a funded company become successful, fund officials hope a portion of the profits could be used to make the competition self-sustaining. Initially, the competition wants to fund between 25 and 30 companies each year, using a collaborative, innovative website built in consultation with the founders of Monster.com, LinkedIn and Facebook.
According to the initiative website, there will be six different tracks that can receive funding:
- Health care, and life sciences
- IT, software, and gaming
- Clean technology and energy
- Social development and nonprofit
- Open category, seed stage
- Open category, expansion stage
This initiative is a marked departure from the creation of direct employment opportunities created by the federal stimulus act. Offering seed funding from a public-private partnership of venture capitalists, foundation and the state itself for startups that are founded, built and headquartered here is innovative. The number one concern, however, expressed by Massachusetts IT executives in a study presented by researchers from the Massachusetts Donahue Institute, was the cost of doing business in the Commonwealth, with respect to taxes, unemployment insurance and compensation. Public and private partnerships came in far below improvements to IT infrastructure or the science and technology pipelines.
Even so, the hundreds of technologists and business leaders were left buzzing following the announcement here in Cambridge; clearly, there are high hopes for the innovation that may be sparked by MassChallenge Venture Funds Competition. That said, Boston Globe reporter Scott Kirsner tweeted the following: “Key detail about $25 million MassChallenge “fund”: it hasn’t been raised yet, and winners will need matching $ from VCs.”
An archive of the livestreamed video of the announcement is embedded below. The Governor’s speech begins 20 minutes in.
[kml_flashembed movie=”http://www.ustream.tv/flash/video/1634986″ width=”425″ height=”350″ flashvars=”autoplay=false” wmode=”transparent” /]
(We apologize for the relatively low quality of the audio and video.)
We went on a roll with business intelligence on SearchCIO.com last week, delving into BI interfaces and steps to unfreeze a BI strategy in an organization. We also kept things lively on the blog, with posts on the Cognos bribery scandal in Massachusetts, Verizon’s cloud pricing and how the economic recession is driving desktop replacements. Check it all out below and let us know what you think!
Next-generation BI software: It’s all in the interface – Business intelligence tools developers hope to increase BI usage among employees — especially younger ones — by adopting the look and feel of popular consumer applications like Google.
Five steps to unfreeze a business intelligence strategy – Experts share a roadmap for getting a stalled BI strategy back on track.
It appears that the economic recession is driving some companies to look for desktop replacements. Sure, desktop prices have come down significantly, and plenty of people argue it would take years for a large enterprise to phase out desktops, if it chooses to at all, but the cost of desktop management is just not worth it to some folks.
I’m seeing large companies giving out stipends to employees, telling them to buy whatever endpoint they want. Some of these companies also want to use virtualization technology on the endpoint to isolate corporate software from personal software. If the client device breaks down due to personal software, the user is responsible for getting it fixed, not IT.
A move to desktop replacements like iPhones and lightweight laptops is already driving down the need for traditional desktops. How often do you hear people saying they’ll get to something when they get back in the office these days? Most already carry around their device of choice in this world of road warriors.
Chris Brady, CIO of Dealer Services out of Carmel, Ind., thinks traditional networks and PCs will be undergoing a transformation largely due to virtualization. “The cost of keeping all the desktops and laptops connected and running and virus-free requires a substantial amount of resources. … Do you really need to spend that much money to provide access to an application?”
There has to be a better way to efficiently address desktop management, and she sees that in client-side hypervisor technology, a desktop replacement approach in which the applications that users need reside on the end device of choice and do not have to continuously hit a network server. Such technology is being developed by VMware and Citrix, but it is still first gen.
“I think it’s still too bleeding edge, but we are definitely looking at such technology to replace our current PC model,” Brady said.
She also couldn’t justify the cost of a new PBX switch and moved the company’s 450 employees to VoIP.
Desktops? PBXs? Or are there applications that are just not worth keeping in-house any longer? What do you think is on the hit list as people try to gain efficiencies and cut costs during this economic recession? Will cost-cutting measures lead to the demise of certain technologies?
Let us know what might be on the way out at your organization, firstname.lastname@example.org.
Verizon unveiled their cloud computing offering this week and introduced a new question into the debate over cloud: Which is more important, price or reliability? Carl Brooks runs down Verizon’s cloud pricing scheme in detail, and it’s a very different flavor than Amazon Web Services. Verizon: pay $750 just to get started, and then by the day. Amazon: nothing to start, pay by the hour.
Translate that into use cases and you get Verizon=deliberate act by someone with a budget, Amazon=casual act by someone with an expense account. Of course, Amazon already has customers with budgets, but they may well have started as casual users kicking the tires at virtually no risk. Verizon’s early adopters will have likely gotten a nod from someone in authority and have a budget — no mention was made of self-service and credit cards.
At first glance, Verizon’s entry seems a bit like Dad showing up at the high school dance dressed like all the cool kids. But in some ways, Verizon’s offering marks a turning point in the emerging cloud market because Verizon (as with most major telcos) is all about uptime and process. Brooks’ story quotes a Verizon exec suggesting, for example, that users will likely be able to bring auditors in to meet their compliance and security audit needs. Verizon is talking about “100% uptime.” Amazon is a bit elusive on their exact uptime and to my knowledge has no kind of customer audit capability.
Verizon is only committing “a few hundred” servers to the project as yet, but they are the first major player to emphasize those kind of enterprise requirements. The question to readers is, are you looking for that kind of enterprise reliability in cloud now, or are you currently more into cheap trials? And if it all works out, do you see a Verizon as a long-term partner?
Talk about a lack of business intelligence: A former Cognos BI sales rep has been indicted, along with some former top Massachusetts officials, in a bribery scandal surrounding a now-voided $13 million deal for performance management software for state government.
Though nearly all the players have since moved on to other things, this episode takes us back to a time that wasn’t good for this state’s IT. Indeed, the IT organization was apparently nothing but a pawn in this transaction, as the House speaker and his associates took seeming advantage of a CIO office in transition.
The time of the alleged activity found the IT organization in the hands of an acting CIO, the previous two CIOs having left after short tenures in apparent turmoil over an open document standard. CIO Peter Quinn resigned in late 2005, and his successor, Louis Gutierrez, lasted just 10 months. Gutierrez resigned in October 2006, citing a lack of funding for the commonwealth’s technology initiatives. Interesting how the House speaker pushed through legislation for $15 million for a BI project just a short time later. (He resigned earlier this year and is a key figure in the indictment.)
The acting CIO then signed off on the Cognos BI deal; in one account, this interim leader said the influence of top politicians didn’t affect her technology choice. However, the project didn’t get far. The commonwealth finally hired a permanent CIO in July 2007, Anne Margulies, who soon “raised concerns about ‘discrepancies’ in the bids,” and ordered the review that eventually uncovered the alleged activity, according to one report.
Now, anyone who pays attention to the news knows that there’s plenty of influence peddling out there, and much of what we find out about is in the public sphere, where everything from construction contracts to political office seems to be available for a price. CIOs are hardly immune to similar temptations. Whether it’s Lakers tickets or a pool in your backyard, CIOs do encounter vendor bribes, and it’s my guess that not all of them are as honest as the CIOs we interviewed for a story on steering clear of vendor bribes a couple years back.
Still, in Massachusetts, it’s notable that only elected officials and their lobbyist face charges as a result of the investigation into the bribery scandal. But the fact that no one from IT was fingered isn’t exactly good news, either. If elected officials (or executives) are steering the IT ship, choosing the technology path or big package that will perform key functions for years to come, something is wrong. Of course, with a revolving CIO door, Massachusetts already knew that.
June is here! This past week, SearchCIO.com delved into outsourcing and offshoring in a recession, launched a business process management (BPM) quiz, discussed the range of IT Infrastructure Library (ITIL) training tools and techniques, and provided some tips on keeping your IT job. Read the full stories and check out our latest blog posts below!
Outsourcing and offshoring in a recession more flexible, panelists say – Outsourcing and offshoring activities in a recession thrive on flexibility from both clients and providers, according to panelists at the 2009 MIT Sloan CIO Symposium.
BPM quiz for enterprise CIOs – BPM is gaining momentum as a way to cut costs. Get up to date with our coverage and test your knowledge with this quiz.
The range of ITIL training tools and techniques and how they add value – Learn how to incorporate ITIL training tools such as simulation workshops, process modules and use cases into your ITIL service management training.
Tips to keep your IT job and move along CIO career path in a recession – In this recession, there are many ways to not only keep your IT job but also expand your career options by demonstrating strong leadership and a business focus. Here’s our advice.
I’m still reflecting on last week’s MIT Sloan CIO Symposium, where my colleagues and I gathered a lot of good information on CIO leadership, IT outsourcing, health care, CIO innovation and more — and where some of us used Twitter for business to share, in real time, some of what we were hearing.
As I live-Tweeted and followed others via the #MITCIO hash tag, I have to say there were upsides and downsides to using Twitter for business. I’m used to taking extensive notes at conferences, but with live-Tweeting I felt the margin for error was greater — not only for typos, but also for failing to provide crucial context for a quote. And I know that I was more likely to miss that context as I was typing out Tweets – context that I would almost certainly capture when taking notes the old-fashioned way. On the other hand, I gathered a lot of Twitter followers relevant to my work, and now have the opportunity to follow and learn from them, as well.
We did find live-Tweeting to be helpful for capturing and sharing sound bites — but did you?
Here are some of my favorite quotes from the MIT event (with full speaker titles added, since the darn 140-character limit didn’t allow for them as I Tweeted them):
“Just because a CEO carries a BlackBerry, he/she doesn’t necessarily get technology. CIOs must show how investment pays off.” — Jim Champy, chairman of consulting, Perot Systems Corp.
“Innovation is easy — it’s called continual improvement.” Look to process improvement, not big infrastructure change. — Alan Trefler, CEO, Pegasystems
“I don’t see cloud computing as a game changer for big companies. … They have to clean up infrastructure [first].” — Jeanne Ross, director, MIT’s Center for Information Systems Research
Don’t waste recession: “Hopefully, 10 years from now, we’ll look back and call this ‘The Great Restructuring.'” — Erik Brynjolfsson, Schussel professor of management and director of the MIT Center for Digital Business
“We’ve been talking a lot about cloud computing here. Maybe the next big thing is crowd computing.” — Tom Malone, Patrick J. McGovern professor of management and director of the MIT Center for Collective Intelligence
So — do you find these Tweets useful or engaging? Does using Twitter — either as a Tweeter or a follower — enrich your understanding of a conference while you are there? Do you follow individuals’ Twitter feeds or conference hashtags when you’re not in attendance? Or would you rather that we bring you fuller coverage after the fact?
For 20-odd years, the many problems with electronic health records (EHRs) ably highlighted by Karen Guglielmo have stymied the pervasive use of IT in healthcare. But the Feds’ newfound interest in EHR could well change all that. The reason is not so much the $34 billion allocated by the government for electronic health record development – much of that seems destined to help individual doctors or small practices and clinics. For hospitals and other health institutions, the payoff may well be the new air of seriousness surrounding EHR. With the Feds looking for major cost savings to help offset historic deficits, I expect a certain amount of arm twisting to get all the parties to play nice.
We recently surveyed several hundred IT managers in healthcare institutions to see where people are at. Sixty percent have some form of EHR under way, with 36% either planning or in some stage of deployment. IT managers at these healthcare organizations see themselves overwhelmingly as playing a major role in EHR implementation, often leading the project.
The EHR troika is shaping up to be IT, medical records and medical staff. Pencil in the compliance officer and make that a quartet. CIOs I have spoken with are talking up the idea of a chief medical information officer (CMIO), most likely a doctor with an IT bent, as the ultimate application owner. The CMIO is shaping up as the person who can hold software vendors accountable for the two main issues that have plagued EHR to date and that Guglielmo wrote of in her blog entry: unwieldy user interfaces and lack of interoperability.
Within IT, CIOs and security managers will have the biggest involvement in the up-front planning and decision making around which packages to buy, etc. Development staff will, of course, be involved in the inevitable customizations. However, 75% of our respondents will bring in outside professional services for some phase of the project, especially for customization and deployment.
Once established, EHR will become the responsibility of application managers (CMIO or not) and of course, the usual infrastructure directors of servers, storage, database and networks.
Hospitals have often lagged behind corporate IT in their adoption of new technology, with notable exceptions in digital imaging and wireless networking. Still, we are likely facing a wholesale modernization of hospital IT to accomplish the broad goals of electronically managed healthcare. Without high-density commodity servers and server virtualization, for example, it’s hard to see how hospitals can afford to run all this new software. Will they also say goodbye to Unix and rely on Windows and Linux exclusively? Will hospitals be able to afford maintenance of fat clients in every exam room, or will they opt for desktop virtualization of some flavor? Time will tell.
The other thing time will tell is if the government or industry can rationalize the cuckoo economics of EHR. Conventional wisdom is that payers will be the biggest beneficiaries of cost savings, while providers the biggest spenders. Seems like we’re just trading one series of problems in healthcare financing for another unless that’s addressed.