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.
Happy Monday! We had another busy week at SearchCIO.com. Here are our latest stories:
- Web 2.0, Web 3.0 mashup to yield more personalized online experience – At the EmTech conference at MIT, the mashup of Web 2.0 and Web 3.0 takes center stage, with implicit ramifications for enterprise CIOs.
- Health care CIOs grapple with e-health record adoption – Adoption of the electronic health record and related technology tools for physicians could revolutionize health care. But health care CIOs need to overcome cultural obstacles.
- BPM Platform as a Service turns IT shops into SaaS providers – A business process management (BPM) project a minute? Pegasystems offers a twist on BPM, turning corporate IT shops into SaaS providers with a BPM Platform as a Service.
- How the SEC’s proposed IFRS will affect your accounting systems – As the SEC looks to replace Generally Accepted Accounting Principles with the International Financial Reporting Standards, CIOs should evaluate the effects on financial data and application architecture now.
As if you didn’t already know, your buddy with the middle initial F is back. And I do mean buddy. A memo out this morning from consultancy Gartner Inc. reminds that in economic crises, CIOs need to “build a powerful alliance” with their CFOs to improve business value.
That would seem to be a wise step in light of the dark news today that stocks plunged more than 600 points, and that according to the latest Wall Street Journal (WSJ) survey, a majority of economists believe gross domestic product (GDP — the total value of goods and services produced) will shrink in the third and fourth quarters, as well as the first quarter 2009. If true, the WSJ piece says this would mark the first time U.S. GDP has shrunk for three consecutive quarters in more than 50 years.
Ugh. Back to you and the Gartner memo.
It seems that despite years of being told you need to “demonstrate the business value of IT,” doing so has proved a Sisyphean labor for CIOs “because of misaligned mind-sets between the CIO and CFO,” writes Dave Aron, a Gartner VP and research director. The path to reconciliation?
“The CIO and CFO have to devote time to aligning the economic architecture and the enterprise architecture of the business. In order for CFOs and CIOs to ally closely, they must come to a shared view of value. The most powerful tools for achieving this alignment are portfolio management and enterprise architecture.”
In 2008, 23% of CIOs report to the CFO, while 38% report to the CEO, but the trend is listing toward CIO to CFO.
Ugh again. CIOs with their IT shops in order and looking to have a bigger impact on business value have a harder time busting loose when they report to the CFO, Aron said.
“There are two clear pieces of evidence for this. First, only 45 percent of CFO-reporting CIOs have leadership roles outside of IT, compared with 63 percent of CEO-reporting CIOs. Second, CFO-reporting CIOs spend one day less per month with the board and senior executives than do CEO-reporting CIOs.”
Not to despair.
“The message here is not that CFO-reporting CIOs are doomed to failure,” Aron said. “Rather, it is that these CIOs need a focused plan to break out of the box, which should include influencing the CFO to be more IT-savvy and to understand the CIO’s full capabilities as a contributor.”
SearchCIO.com senior news writer Linda Tucci wrote an excellent, layered story yesterday on electronic health records. “Privacy issues, interoperability issues, liability and physician reimbursement for all that extra virtual attention are potential deal breakers as the medical practice goes electronic,” she writes. “But most important, people have to understand why e-health is good for them.”
Electronic health records are certainly a hot topic in the presidential campaign. Those of you who watched Tuesday’s town hall-style debate between Democratic candidate Barack Obama and Republican candidate John McCain heard Obama say that he would cut health care insurance premiums by as much as $2,500 a year by investing in prevention and improving electronic health records.
There are several news sources taking aim at Obama’s assumptions. The Washington Post explains that his campaign is relying on a 2005 study by nonprofit think tank Rand Corp., which estimated that the nationwide adoption of paperless health records would result in $77 billion in savings.
But the same study estimates that the shift wouldn’t be completed until 2019, after Obama (should he be elected) would be out of office. Furthermore, the Congressional Budget Office (CBO) has put out its own paper, “Evidence on the costs and benefits of health information technology,” which argues that a 90% adoption rate over the next decade is unlikely, as moving to a fully computerized system of medical records would be prohibitively expensive for small and medium-sized medical practices. In his blog, CBO Director Peter Orszag wrote that the RAND study “suffers from significant flaws.”
So Obama’s claim is a reach, at best. As we head into these final weeks leading up to the election, just stick to the facts, please.
Do any of you have experience implementing electronic health records and, if so, what is your view of the timeline and obstacles to a reliable, secure and widespread system?
Yesterday on SearchCIO.com, we ran a story I wrote about the burgeoning mashup of Web 2.0 technologies into something that’s being called Web 3.0. It’s based on the assumption that the next generation of the Web will require less searching on the part of users as advancing Web 2.0 innovations such as blogs, wikis and social networking forums push desired information straight to them. Check out this definition of Web 3.0 that was overheard in the tech blogosphere.
A friend sent me this article from The New York Times yesterday on a Google e-commerce effort that would allow YouTube users to buy digital goods from Apple’s iTunes store or Amazon.com, which I think is a move toward this Web 3.0 concept.
Remember how exciting it was to search a movie time on the Internet, rather than via the newspaper or a dial-up phone number? Within the next decade, it’s likely you’ll be able do the same search and receive not only movie times but also the locations closest to you, what your friends are seeing, what others in your social network thought of the film and where everybody is going to have dinner afterwards.
One of the speakers at MIT’s EmTech conference referred to Web 3.0 as “frothy,” and compared the “rush of innovation” to that which characterized what I guess we’d now call Web 1.0. It still amazes me what we’re able to find on the Web … it really has changed both my everyday life and the way in which I complete my work.
I’ll give you an example. As I was typing this post, my cell phone rang, and the out-of-area caller ID was a number I didn’t recognize. Before the phone had even stopped ringing, I had already searched the phone number in Google and come across this website that tracks suspicious phone numbers. Within seconds, I could see that several other Boston-area individuals had received calls from this number in the past hour, so I’d like to think I wisely ignored it.
Are you as excited about Web 3.0 as I am? Are these concepts that you are looking to implement into your company’s Web strategy?
Happy Monday! For those who missed it, here’s what we produced on SearchCIO.com last week:
- Microsoft: Spatial computing the future — Microsoft’s Craig Mundie says the next era of computing will ride on multi-core processing and spatial computing, but it will be defined — as previous computing eras — by killer apps.
- Information lifecycle needs data realignment fast — Unstructured data and classification woes prevent companies from lining up business processes efficiently.
- Mergers and acquisitions can catapult CIOs to new career heights — CIOs in the middle of a corporate merger and acquisition should use the opportunity to build expertise in finance and other areas across the enterprise.