Downturn, shmownturn. Your peers at technology companies apparently don’t need a global recession to get their juices flowing. A new survey of 151 U.S. technology company executives by Deloitte Consulting LLP identified competition, not a downturn in the economy, as a main driver of change at their companies. The execs hailed from a variety of technology sectors, including telecommunications, semiconductors, OEM/hardware and software industries, Deloitte said.
According to the study, a majority of the technology companies (59%) surveyed said they had shifted focus prior to the economic downturn to concentrate more on tuning up internal operations that would make them stronger and more flexible in the face of global competition. Company-wide initiatives centered on implementing information technology, driving cost reductions and restructuring operations, as opposed to emphasizing new products and services.
“While new product innovation and market expansion have and will continue to be crucial elements to a technology company’s success, they alone are not longer sufficient to guarantee long-term survival and value creation,” says John Ciacchella, principal and U.S. consulting technology leader at Deloitte.
Not only were these technology warriors on the rampage before the recession hit, but they’re also pretty delighted by their own efforts. Another eye-opener from the survey: The majority of initiatives met (60%) or exceeded (23%) expectations, while comparatively few failed (5%) or only partially met (12%) expectations
In honor of Halloween, Kristen Caretta, associate editor of SearchCIO-Midmarket.com, and I decided to get a bit silly and dream up our top 10 Halloween costumes for the IT set. Wear these to your office party and wait for the compliments – or, possibly, eye rolls – to come in.
Without further ado:
- HAL, from 2001: A Space Odyssey. Dress all in black and affix a red, glowing button to your chest, with a “Hello Dave” sign underneath. You’ve probably heard the rumor that the name HAL might have been derived from IBM … which offers me an excellent opportunity to direct you to our Halloween-themed podcast on SearchCIO-Midmarket.com, where IBM’s business continuity expert Pat Corcoran discusses IT lessons learned from horror movies.
- iPhone 3G – This could qualify as a “scary” costume in the sense that, “It’s scary how one technological behemoth is changing the way consumers look at mobile computing” (even if opinions on the iPhone’s application in enterprise are still, uh, mixed).
Sport a rectangular box (black or white if you’re going as a 16 GB model, black only if you’re going as an 8 GB model) with colorful icons pasted on it. Encourage party guests to try out your “apps”: ask them to sing a song, and try to identify it, a la Shazam or Midomi. Or make restaurant recommendations in their neighborhood. Or provide them with the latest scores for their favorite sports teams. The possibilities are endless. And maybe you’ll even be lucky enough to run into a party guest dressed as Google’s G1 Android phone and get a competition going….
- Cloud computing: Strap a big, clear bag containing cotton around your midsection, and walk around all evening with a laptop tucked under your arm. When people ask about your costume, explain that you’re to thank for Google Apps and the like.
- A credit card: Infamous data breaches the past couple of years at Hannaford Bros. Co. and The TJ Maxx Cos. have caused some consumers to think twice before paying via credit. Dress up as a Visa or Mastercard, and let everybody know that you’re interested in transacting with only the 50% of businesses that are compliant with Payment Card Industry Data Security Standards.
- A telecommuter – Show up in your pajamas and slippers and explain that you’ve been slaving away at “the home office” all day. Make it clear that, no, you haven’t been laid off – CIOs report that they’re actually relatively secure in their jobs despite the current financial crisis.
Want to know the other five? Visit SearchCIO-Midmarket.com’s CIO Symmetry blog. And feel free to chime in with your own suggestions!
Forrester Chairman and CEO George Colony has a reassuring blog out this morning on the impact of a global recession on tech. His take? Technology had its Great Depression in 2001-2003, and this time will be different. Seven years later, the irrational exuberance that proceeded the fall has modulated. Tech will be down but not out, Colony says:
2001-2003 was a tech depression. Spending stopped, projects were canceled, excess inventory flooded the market destroying pricing. Cisco lost half a trillion dollars of market cap. Why? Tech had a long way to fall. Tech spending in 2000 in the U.S. was up 12% — there was fluff and fat everywhere. When the bubble burst, the fall was precipitous. But tech spending was up only 6% from 2006 to 2007.
Another difference from seven years ago?
There were no big tech changes afoot back in 2001-2002. Not true now. Virtualization, social computing, mobile computing, Green IT, SOA, extended Internet (connecting the physical world to the digital world) are front and center on the agendas of large companies. Will many of these projects get cut back? Yes. But many are part of long-term company plans — they will persist despite economic slowdowns.
Colony, as anyone who attends Forrester conferences knows, has long advocated a name change for IT to BT, or business technology, to acknowledge that IT sits in the center of business operations. BT will drive the recovery this time, he says, from Wal-Mart using social computing to sharpen its response to customers to JPMorgan integrating Bear Stearns.
Let’s hope IT can take care of business.
Here’s a rundown of the latest content on SearchCIO.com:
- Gartner: 25 ways to cut IT costs — Cutting costs is “never an activity with long lead times,” according to Gartner analyst Ellen Kitzis. Here are 25 tips from Gartner to think about between now and the end of the year.
- Top five tips for CIO strategic planning — Strategic planning for enterprise CIOs takes on even more importance in an unsteady economy. Here are five tips for doing it properly.
- Traditional DR test models outgrow usefulness — Traditional disaster recovery testing methods focus on a small group of mission-critical applications, leaving many important ones at risk.
- Managing IT risk in the enterprise — In this podcast, author George Westerman offers advice to help you turn IT risk management from a cost of doing business into an enabler of strategic value.
Sun Microsystems co-founder, early Google backer and computer engineer extraordinaire Andreas von Bechtolsheim is leaving his job as chief architect at Sun to apply his considerable talents to Arista Networks, a company he started as a sideline four years ago. The startup, which sells cloud networking technology for large data centers, has built a line of 10 Gigabit Ethernet switches that Arista execs say rivals anything Cisco offers, for a fraction of the cost. Google is a customer.
This is the second time von Bechtolsheim has left Sun, having decamped in 1995 to found Granite Systems, also a developer of high-speed network switches. That company was acquired in 1996 by Cisco for $220 million, with Bechtolsheim owning 60%. He worked in Cisco’s Gigabit Systems Business Unit until leaving to found Kealia Inc. with David Cheriton, a partner at Granite Systems. Kealia, which focused on advanced server technology, was acquired by Sun in 2004, prompting Bechtolsheim’s return to his old stomping grounds.
The high-profile leave-taking is getting a lot of play in the industry and mainstream press, most of pretty breathless. The New York Times story refers to Bechtolsheim as a “brilliant billionaire who has created some of the best-selling computer systems in the industry.” BusinessWeek casts the high-profile leave-taking as another blow for the slumping Sun, depicting Bechtolsheim as Sun’s “technical savior.”
No question the German-born Bechtolsheim is a star of the first order at Sun. He was a wunderkind when he designed Sun’s (Java) original workstation while still a Ph.D. student at Stanford University and does not appear to have lost any of that youthful brilliance. Certainly Sun Chairman Scott McNealy must be feeling the loss, judging from a keynote talk he gave shortly after Bechtolsheim returned to the company in 2004.
In the keynote an ecstatic McNealy recalls meeting Bechtolsheim on the Stanford campus “a long long time ago,” when McNealy was 27. “Little did I know that he would turn into what I consider to be the most prolific and exciting and talented workstation and single-board computer designer on the planet,” says McNealy, welcoming “employee number one” home and inviting Bechtolsheim to join him on stage to answer questions about what the Kealia technology would do for Sun.
“This guy is prolific beyond anything you’ve seen and we are very, very excited. It is kind of nice to have him running up the steps and lighting the torch here for what we are going to do. … I just do not know if you can tell how excited I am to have Andy back on board because I will follow this guy anywhere and do everything I can to help him be successful.”
You can read the full interchange with Bechtolsheim at that 2004 conference on SearchCIO.com.
I’ve noticed that our readers have a penchant for a list-based story now and then, and Linda Tucci’s report from the Gartner Symposium/ITxpo 2008 in Orlando was no different. Her list of 25 tips for cutting costs in IT, via Gartner research vice president Ellen Kitzis, provided a lot of solid, applicable advice for CIOs and IT executives looking to trim organizational fat.
A few “favorites” from the list jumped out at me:
1. Focus initially on cutting “people costs”: Freeze headcount, reduce/eliminate special bonuses, reduce regional support.
Kitzis said 37% of an average budget is spent on people costs, including money paid to contractors. According to Gartner, companies were planning to spend $13,454 per employee, and that is already down $200, or 1.7% per person. Painful to talk about, this area is a big target — but use a scalpel. Keep people who ensure the greatest transmission of business knowledge.
You keep hearing the “scalpel” versus “hatchet” debate between the presidential candidates, and it’s true in the IT arena as well. As difficult as this is, you must consider staff cuts, and look to remaining employees and/or outside contractors to fill some of the gaps.
2. Flatten organization structure: Move to collaborative, team-based models.
More people are working in virtual teams, and the model is reducing overhead administrative costs, Kitzis said. It’s not unusual for managers who oversaw seven people to now manage between 15 and 20 people.
To continue on this point, fostering teamwork and offering the option of telecommuting can bolster employee satisfaction, so you’re not as likely to lose the good people you choose to keep on board.
7. Use invoice verification.
The industry has seen a slew of acquisitions. Big vendors have snapped up small fries with 1,000 customers apiece. It’s easier for them to apply their boilerplate policies to inherited customers and wait for the complaints than it is to review contracts individually. You can save 5% to 10% by correcting those invoices or play hardball when you agree to a new contract.
Maybe it’s the perpetual bargain hunter in me, but this sounds like a no-brainer. Don’t wait until a series of invoices rolls in before you raise your concerns with a vendor. Everybody is looking to come out ahead, and compromise is key: If the vendor is refusing to budge on the price, perhaps you can inquire whether it’s possible to throw in any additional services in exchange.
12. Use “best-for-need” rather than “best-of-breed” products.
You could be paying as much as a 50% premium for best of breed.
Sure, it’s nice to be able to boast that you have the latest and greatest in technology at your firm. But this isn’t the time to be showing off. Purchase and maintain the items that fit your needs, and apply the savings toward other areas in your company.
13. Move to corporate liability for wireless services (save 15% to 30%).
Who’s responsible for the bills of individuals, what devices they use? The enterprise should take control and set standards, Gartner analyst Phil Redman said.
Delineate your policies clearly, so you don’t have employees knocking on your door asking why their iPhone isn’t being covered or how many work-related text messages they’re allowed to send per month.
What did you think of the suggestions on the list? Have you tried any of these? Do you have any to add?
Good morning! Here are the latest stories from SearchCIO.com:
- Risk management compliance holdouts get wake-up call – Enterprise business and technical leaders have been warned to stop procrastinating and get their enterprise risk management, or ERM, act together.
- Gartner: Restructuring top concern for CEOs in 2009 – Predicting what’s going to happen with the economy is a fool’s game, but you can be sure of one thing: Your CEO is thinking worst-case scenario.
- JetBlue’s new IT chief relentless on meeting business goals – A project management office, off-the-shelf technology and a relentless focus on your company’s strategy will help make you a leader among business executives, JetBlue’s Joe Eng says.
- Business process management strategies for enterprise CIOs – Business process management (BPM) is a systematic approach to improving an organization’s business processes. It ideally helps large companies better understand the complex interaction between employees and computer systems and automates mechanical business processes so employees can use their skills in more value-added ways. But establishing a BPM strategy is no easy task, particularly for enterprise companies. This CIO Briefing contains articles on best practices, case studies and tools that will help CIOs of large organizations deploy BPM strategies.
Virtualization — the ghost in the machine — won top place in Gartner’s annual list of IT technologies that will likely impact your business in the next three years. Cloud computing came in No. 2. The power of the Web made itself felt, with Web-oriented architecture, enterprise mashups and social software and networking jumping up the list from last year. Oldie but goodie business intelligence is back in a new guise. Green IT, No. 1 last year, occupies the No. 10 spot in 2009. We’ll explain later.
Virtualization was singled out not for its newness — the concept has been around for decades — but for the myriad ways it provides value to the enterprise. Likening virtualization to a Swiss Army knife, Gartner analyst Carl Claunch said its uses extend well beyond servers now, to storage and client computing. And it is not just the cost savings that make this technology so compelling. Virtualization’s capacity to make computing appear simple and homogenous on the face of things, while accommodating the required complexity on the back end is perhaps its ultimate achievement, said Claunch. He presented the list with colleague David Cearley at the Gartner Symposium/ITxpo going on in Orlando this week.
It’s hard to overstate how much the faithful who trek to Symposium get a charge out of this annual ritual. From the size of the crowd — cheek to jowl and standing-room only — you’d think Gartner was announcing this year’s Nobel laureates or the 10 finalists on American Idol. Technology rocks too.
The session went for about 45 minutes, with interesting analysis from Claunch and Cearley. I considered typing out the details, but the Gartner announcement of the top 10 gives you the rationale, if not all the nuances, for the rankings. And I’d much rather hear what you think of the list.
So, without further ado:
Gartner’s 2009 top 10 winners
2. Cloud computing
3. Servers — beyond blades
4. Web-oriented architectures (WOA)
5. Enterprise mashups
6. Specialized systems
7. Social software and social networking
8. Unified communications
9. Business intelligence
10. Green IT
Changes from the 2008 Strategic Technologies List
• Retired* from the list: Real World Web, business process modeling, metadata management.
• Topic retained and evolving from last year: Green IT, virtualization, unified communications, mashups (now listed as enterprise mashups), social software (adding an emphasis on the social networking aspect), WOA, beyond blades (was listed as fabric computing last year).
• New this year: Business intelligence, specialized systems, cloud computing (evolving from 2008 Web platform topic).
*Gartner: Removing a technology from the list does not mean it is no longer strategic. Rather, it reflects a shift in emphasis relative to other technologies now appearing on the list.
At the Web Experience Forum in Boston yesterday, Mark Hydar, principal group manager for global quality of service (QoS) initiatives for Microsoft, discussed “Microsoft Live: Reinventing the MS online experience from the organization up.”
Hydar said that one of the challenges, as an IT leader, is that you sometimes don’t know what problems exist until they’ve grown into larger problems that users notice — which is why having matrices is so important for higher-level executives like CIOs.
Prior to coming to Microsoft, Hydar was at eBay for more than five years. He said he never would have imagined himself working at Microsoft, specifically because of the usability issues he was brought in to address. Once there, he created a virtual team, or “V-team,” including people from across the business, to accomplish his objectives.
Microsoft measures according to five “pillars” of QoS excellence with regard to its users’ experience with its Web services and products:
- Business-feature metrics
- Customer satisfaction
The first four pillars drive revenues, Hydar said, but it’s customer satisfaction that will drive company growth. When a site is easy to navigate, friends tell friends, and news of the improvements goes viral from there.
Hydar also listed several QoS best practices that Microsoft employs in assessing its online experience:
- Move away from anecdotal data and solicit informational data.
- Create cross-functional teams driving QoS.
- Have each team create a scorecard defining QoS, with segments for customer/client marketing, support, data center/edge (service) and team-specific metrics.
- Provide standard scorecards with some common metrics across teams.
- Use the scorecards to adjust your activities and improve quality.
- Implement a scorecard-driven review cycle.
I think that Hydar’s recommendations include just the right mixture of uniformity across different organizational units – so that you can compare and contrast business performance – and team-specific criteria. And his second-to-last best practice is a good one: all too often, organizations undertake internal studies, only to let the results sit on a bookshelf (virtual or otherwise) and gather dust. When you’ve taken stock of your QoS needs, appoint one or several point people to put them into action. Your users will thank you!
From the Swan and Dolphin resort hotels in manicured (hot as blazes) Lake Buena Vista, Fla., a quick dispatch before the day’s fun begins. I am here at Gartner Symposium/ITxpo 2008. I actually arrived a day early this year to get a bead on what’s in store for CIOs in 2009.
Gartner did something a little different this year, offering three sessions called Jump Start 2009 — one on strategy and planning, another on financial management and the third on managing people. The sessions came with a little activity workbook, with, yes, exercises and self-assessment quizzes to do in class, or in this case, in session, and pointers on how to get a grip on what your business is really all about and how IT can help. I’m going to include details from the two sessions I attended under “Homework You Need to Finish Before 2009” but wanted to give you the gist here on what is shaping up as a big theme at the conference. And I’ll give you the preview of where IT budgets will be next year according to Gartner’s Mark McDonald (channeling Hardball’s Chris Matthews! … more on that later, too.) from the 2009 CIO Agenda session that closed out the day.
Results, results, results
Basically, in what sounded like a bit of a fresh twist on the old business and IT alignment meme, the big message we’ll hear this week is that CIOs have to focus on IT’s impact on business results — assessing, measuring, promoting what IT does for the business. So Dave Aron, in his Jump Start session on strategic planning, made a distinction between doing things right (a given) and doing the right things for the business (what CIOs should be focusing on). IT organizations that fall into the bottom 25% of all IT organizations are distinguished by bad delivery, so it is never good to screw up on the fundamentals. But Gartner research shows that top performers are not distinguished by good delivery but by good strategy. CIOs need to figure out what makes customers choose their company or their organization over the competition and then focus on how IT can push that strategy.
In the Jump Start session on financial management, Barbara Gomolski said CIOs have got to come up with a new template for presenting the IT budget that reveals what IT does for the business. One insight: try presenting your IT budget in business terms, as the CIO of a Florida county did this year. It’s tricky, judging by the (unreadable) flow chart used in the Florida example. And there is apparently a big danger of duplication of IT spend. But the idea is to map IT spend to business programs. Another suggestion? Start by showing what percentage of IT spending goes to running the business, growing the business and transforming the business, and map the IT projects to business initiatives in each of those categories.
Let’s play Hardball
How should you think about next year’s budget, given the financial ruin of the past few weeks? Try a ham and cheese sandwich, says McDonald. Back in July, when he started to think about IT in 2009, it was shaping up as a roast beef dinner, “not the fanciest of meals, but satisfying.
“Unfortunately, the rest of 2008 came and everyone is living on a diet,” he said.
Instead, 2009 is looking more like a ham and cheese sandwich — appealing or lousy, depending on the quality of the meat and cheese, but with room for little flourishes like hot mustard and a pickle on the side. The good news? It isn’t bread and water.
Now, for the money part. According to MacDonald, based on the Gartner polling so far, IT budgets could be anywhere from UP 3.3% next year, compared with 3.18% growth in 2008, to DOWN 2.5%. Most likely? Flat to up 2.3%.
Here’s the big hunk of salt: Gartner’s budget polling started Sept. 15 and won’t close out until mid-December, McDonald said, so anything could happen to that forecast. Another way to look at it is that, again — so far, anyway: For every one CIO who is cutting the IT budget, 2.8 CIOs say their budgets will go up next year
A postscript on just how much presidential politics is on the brain: I’ve heard McDonald talk many times. He’s an animated speaker. Entertaining. He likes to do impressions — the deep-throated, self-important, clueless CIO who doesn’t listen to Gartner and pays dearly is a favorite. He likes to poke fun at his girth. Maybe I’ve been watching too much cable news, but at yesterday’s session he sounded exactly, I mean exactly, like Hardball’s Chris Matthews — the cadence, a lot of “et cetra, et cetras,” the talking through a grin … I’ll post an audio clip and let you be the judge. Off to Day 1.