Before the economy crashed and the word recession was officially applied to the economy, the buzzword of the IT conference circuit of 2008 was innovation. The trend, we were told, would be that as the more basal functions of IT move inexorably to service providers, the internal IT shops would focus more on strategic initiatives — those that differentiate the business and generate revenue.
This was not just idle chatter. Between 1994 and 2005, IT did indeed generate revenue. IT accounted amazingly for two-thirds of the all productivity gains in this country! And there is no doubt that since 2005, IT innovation has been, if anything, going on at an even faster pace, with technologies like virtualization and Software as a Service (SaaS) fundamentally transforming how IT is done.
But the signs are not good, at least for the immediate future.
In our TechTarget September 2008 survey of some 1,000 IT professionals, nearly three-quarters said the economy is now the single biggest factor in their decision making — and this was before the November market nosedive. Three-quarters of the respondents said their IT budgets would be further curtailed if things do not turn around in the first six months of the year.
So, what is on the chopping block if budgets shrink?
According to the TechTarget survey, what is still safe is compliance, followed by disaster recovery and business continuity, the network, security and custom apps. What’s not safe? Not surprisingly, people — job security always goes down in tough times. What’s also likely to be jettisoned are the newer technologies — SaaS, mobile enhancement, wide area network optimization/acceleration, SOA.
The fierce urgency of now means that technologies that save money, that provide transparency and allow companies to absorb change will be implemented before any newfangled innovation.
So is innovation in jeopardy? It depends on how you define innovation.
Two quick examples. One is from a government CIO I talked to recently. All of the new projects he was planning on for next year have been put on hold. The one new project he has been told to go full steam ahead on is automating a business process that was previously done by human beings, because, guess what? Those human beings are no longer there. Re-engineering a business process is not a new technology, but it’s new to him for next year.
Here’s one more, from a CIO of a large building services company. He’s building a social networking site – an au courant technology, to be sure. But it’s not just to show how cool the company is. It is to save his company money on consulting fees and leverage its workforce. The site is tapping a database of former, retired employees to act as consultants to his employees who still have their jobs.
Will the recession kill IT innovation at your shop? Let me know.
See, maybe we all shouldn’t have been so down on John McCain for acknowledging that he didn’t know how to send an email – apparently, it’s something presidents don’t do, thanks to electronic-discovery concerns. According to CNN.com, in taking his oath for office, President-elect Barack Obama is unlikely to carry his BlackBerry, and will probably not send an email for (at least) four years.
That’s because, according to the article, the president’s emails, whether personal or for business, are subject to a subpoena at any time and could be considered public records. Neither Bill Clinton nor George W. Bush emailed while they were in office, CNN reports.
“It’s all discoverable; it creates a trail that might end up in congressional investigators’ hands,” said Clinton press secretary Mike McCurry in the CNN article. If you want to delete White House email, you get a stern warning about archiving presidential records, he said.
Now, I’ll ignore the fact that CNN’s fact checker apparently missed a beat with this article (toward the bottom, there’s a psychology professor quoted from Keene State University, but it should be Keene State College – that’s my hometown). But I’m still kind of baffled and left at a loss with this whole issue. Naturally, the president wouldn’t want his private emails out there for the world to see. But am I the only one who thinks that there must be some better solution than the chief executive of the country living without email?
There’s a reason that email is so ubiquitous in the business world: It allows for communication across geography and time-zone differences. It can provide useful information more quickly and efficiently to a range of people, and certainly increases productivity, in my view. Shouldn’t the chief executive of a 300-million person “corporation” have access to the same tools on which other top executives rely, especially when he’s clearly already a “CrackBerry” addict?
Maybe the answer is to give Obama “read-only” access to his email. That way, he can feel in the loop without ever typing a sentence or hitting “send.” What would you suggest, given his current “BlackBerry blackout” predicament?
It’s up to Obama whether he keeps using email, of course – he’s the president, and I don’t think anybody can command him not to send an email. I’ll be curious to see which way he goes, and whether he feels more or less productive as a result.
A new survey on CIO leadership from IBM finds that you’re pretty pleased with yourselves. Congrats.
According to the survey, taken in July, 91% of CIOs see themselves as leaders of their IT organizations, possessing a clear vision of how IT can drive the business forward. Ninety percent said they have the ability to influence others, even without formal authority. Eighty-seven percent enjoy “strong executive relationships.”
It seems that CIOs also did their best to prime their people for the economic pain ahead. Eighty-five percent told IBM that they are leading initiatives to ensure their organizations are “flexible for change.” Even better? Eighty percent report that they are regarded by their colleagues as a leader of change and transformation within their companies.
The survey results are based on responses from 300 CIOs in 45 countries and 32 industries across the globe.
The fly in the ointment for the technocrats of the executive suite? The business doesn’t think quite as highly of you, as you do of yourselves.
Compared with the overwhelming majority who saw themselves as masters of their IT domain, “only 67% are active participants in developing business strategy,” according to the survey.
Sixty-seven percent doesn’t sound so bad to me, judging from the CIOs we hear from. But a perusal of the 2007 results from IBM’s inaugural CIO leadership survey suggests CIOs have lost a bit of ground on this front in the last 12 months. Last year, 69% of the CIOs surveyed said they had “significant involvement in strategic decision-making.”
There are other indications that CIOs still function as the Rodney Dangerfields of the enterprise.
In contrast with the 90% who said they are leading and influencing across the organization, even when they lack formal authority, only 74% of the CIOs surveyed say that their business colleagues are aligned with their vision. In addition, only 80% say they are regarded as trusted advisors to their business colleagues.
Finally, many of the survey respondents also ‘fess up to falling short on the mantra du jour for the ambitious CIO: IT-enabled business innovation. Less than two-thirds of those surveyed (63%) said they have successfully “secured resources for innovation by identifying technology-enabled business opportunities.”
You can access the detailed analysis of the survey results and learn more about the “opportunity gaps” for CIOs by registering at the IBM link above.
Good morning! Here are the latest stories from SearchCIO.com:
- IT embraces customer-facing video, social connectivity – Online retailers can court customers and increase their Web-based profits by customizing shopping experiences, enhancing videos and embracing social connectivity.
- Survey: Economy puts nonessential IT projects on back burner – A survey finds nearly half of respondents don’t expect information technology budgets to increase in 2009 and have put nonessential projects on the back burner as economic conditions worsen.
- Data center virtualization quiz for enterprise CIOs – Do you know the benefits of data center virtualization for your enterprise organization? Take the following quiz and find out whether you’re a virtualization expert.
- Shifting IT business models in time of economic crisis – For CIOs who already budget lean, here are four more places to save. You can stop some projects, reduce service levels, increase levels of risk and, yeah, move to the cloud.
On the trip down to the annual SIMposium conference in Orlando this week, I leafed through Time magazine’s commemorative issue on the presidential election (great photos from both campaigns) and was struck by the number of advertisements plugging green IT.
Right now, the inconvenient truth that human beings have something to do with the degradation of our environment is a commonplace idea. Everybody is talking it up — well, almost everybody. Companies that are getting on the green IT bandwagon are getting brownie points for showing their awareness of the issue. CIOs are being urged to look beyond energy efficiency in the data center and the IT realm for ways to help their companies reduce their carbon footprints.
It’s not just companies. The National Association of State Chief Information Officers (NASCIO), in its recent paper on green IT, points out that state governors are among the strongest advocates for green technology and suggests CIOs can essentially earn some career brownie points of their own by taking the lead on green issues.
Here’s an obnoxious caveat you might want to think about — actually, I’ll give you three caveats on the rush to go green:
Caveat No. 1: Heavy-metal footprint
Forget about the carbon footprint we hear so much about; consider what I would call IT’s heavy-metal footprint. This relates, of course, to the disposal of IT assets. Think of this like the benefits of nuclear power and the tremendous environmental problems generated by the spent nuclear fuel.
Although the heavy metals found in electrical devices and computers (including computer screens) — lead, cadmium mercury, chromium plus organic compounds related in part to flame retardants — are not radioactive, they are highly toxic to wildlife and children, in particular to developing brains. Think lead paint. Tons of equipment is dumped daily.
At the moment, if the pictures are to be believed, a considerable portion of this IT waste is ending up being disassembled by children in Third World countries, where few or no environmental protections are in force. While regulations are increasing, particularly in Europe, in the U.S. the best practices for disposing of much of this waste are still voluntary.
If money is an object in 2009, as most agree it will be, the least expensive ways of disposing of this waste will likely be associated with unscrupulous agents. The effect will be that poor regions of the world will be contaminated.
To put it another way, as your companies brag about reducing their carbon footprint with energy-efficient data centers and telepresence, it is at least worth keeping in mind that your heavy-metal footprint could have as bad or even worse consequences, like turning a child’s brain green!
There are companies that already get this. Pepsi Bottling is a good example. CIO Neal Bronzo faced the issue head on when he needed to replace 20,000 handheld devices used by delivery drivers. It was discovered that a Pepsi logo could not be removed without destroying the device, and the last thing Pepsi wanted was to see its brand piled atop a smoking heap of electronic waste in a poor Chinese town. Bronzo found a recycling company, Redemtech, which has put a stake in the ground against exporting IT waste.
Caveat No. 2: RoHs and other legislation is coming
Going green is very soon going to require buying electronic parts that don’t have the heavy metals. RoHs (I have no idea how to pronounce this) stands for the “Directive on the Restriction of the use of Certain Hazardous Substances in Electrical and Electronic Equipment.” It is already in effect in the European Union and is headed this way. Companies like Toshiba and Zeiss and others are already starting to sell electronic devices that are compliant with these new legislative initiatives. And given the focus of the president-elect on environmental issues, it would not be surprising to me to see legislation enacted. And that will come with a cost.
My very obnoxious caveat No. 3
Pretty soon the extra credit for going green is going to go away. When green IT becomes the norm rather than the exception, there will be no more brownie points, just like there are no brownie points for complying with Sarbanes-Oxley. If you don’t comply, you go to jail. When that happens, going green will no longer be a bonus point but a cost. And sooner or later, doing the right thing, I hate to tell you, is going to be headache.
Correct me if I’m wrong, but I imagine neither you nor I will be working for President-elect Barack Obama’s administration in any high-ranking official position (that is, unless any of you intend to pursue the Chief Technology Officer job we’ve heard so much about).
But that shouldn’t stop us from gawking at the seven-page questionnaire one must fill out to apply for a top job in the Obama administration, according to a New York Times report. It also raises an interesting question for CIOs: To what extent do you keep track of your employees’ outside-of-work online presence?
The Obama questionnaire asks whether the applicant and his/her spouse or immediate family members have been affiliated with Fannie Mae, Freddie Mac, American International Group, Washington Mutual or any other institutions receiving a government bailout, the Times reports. It questions the immigration status of applicants’ housekeepers, nannies, chauffeurs and yard-workers, and whether the applicant has paid the required taxes for household employees. It even asks about diary entries that could be potentially harmful to Obama if they were to get out.
And here’s the tech angle: Applicants must include any email “that might embarrass the president-elect,” along with any blog posts and links to their Facebook pages. The application also asks people to “please list all aliases or ‘handles’ you have used to communicate on the Internet.”
It’s a good thing I don’t plan on joining Obama’s cabinet any time soon, because I don’t even know where to start. Sure, Obama, you can view my Facebook page, but don’t ask me to be responsible for some of the acronyms my friends might leave on my “Wall.” All of my online “handles”? I know I often use derivations of my first name, last name and favorite numbers, but I couldn’t list them all for you. Embarrassing emails? Define embarrassing. I think we all correspond with friends over things that could be personally embarrassing to us if they got out, but does Obama care that I’m embarrassed that I ate all of my dinner and half of my friend’s meal too?
Yes, I’m being a bit facetious here. Like many people, I try to stay on top of my online “image” through Google searches and Facebook-page culling. And I haven’t documented any criminal activity in blogs or emails, as far as I’m aware. But it does raise the question of what red flags the Obama campaign will be searching for.
The Times article rightly points out that applications for high-ranking government posts always evolve over time and adjust to new technologies. But I think this degree of thoroughness is specific not only to the times, but also to Obama, whose tech-savvy campaign should now be considered a bellwether. He appears to understand not only the positive attributes of the Internet – the way it can bring people together and build communities – but also the why-did-I-write-that? faux pas it documents and preserves.
There’s a lot of good information in Linda Tucci’s report from the SIMposium 08 conference in Orlando this week, including an interview with Sunoco Inc. CIO and incoming Society for Information Management president Peter Whatnell discussing his company’s approach to budgeting in this recession. Sunoco prepared three budgets for next year: what IT would have proposed had the recession not occurred; what happens if the budget stays flat; and what a 20% reduction in budget would look like.
Here’s one part, toward the end of the story, that jumped out at me:
“One game changer [Whatnell is] pushing is using providers like Google Inc. and Yahoo Inc. for email service. The move to cloud providers for email would eliminate the need for disaster recovery for email, since that is baked into the service. If the tradeoff is 90% of the service for one-tenth of the cost, this is an option CIOs must consider.”
Especially in a recession, CIOs and their technology departments are looking to cut costs. So why isn’t this option being discussed more often? Are companies just so used to Outlook and the like that they don’t consider alternatives? Is it because business addresses including @yahoo.com and @gmail.com would appear unprofessional?
If it’s because of some of the well-known scares associated with using cloud email for business purposes, I fully understand. Remember when Sarah Palin’s Yahoo email account was hacked? Nobody wants sensitive company information floating around channels that are not secure. Before overhauling one’s email-server approach, a CIO and his staff would need to methodically review and implement email policies aimed at protecting passwords and other personal information.
Welcome back! We know last week was a busy one, with the U.S. election and all, so we can understand that you might have missed some of our stories from SearchCIO.com. Here’s an easy way to catch up!
- Outsourcing contracts drop sharply in third quarter – Outsourcing fell off a cliff in the third quarter, as both the number and total value of outsourcing contracts decreased by double digits compared with the prior quarter, according to global advisory firm TPI. The lesson for CIOs? Think Priceline Negotiator.
- Forrester: How IT rides out the recession – Forrester says in recession times, CIOs should look for smaller projects with faster paybacks. Tight alignment with business strategy is more important.
- Outsourcing contracts need tightening in poor economy – In slow economic times, organizations in the past have turned to outsourcers to cut costs. But that model may no longer hold true as IT leaders are asked to cut deep — way deep.
- CIO Briefing: Disaster recovery and business continuity guide for enterprise CIOs – Recover from disaster and keep your business on track with the advice in this guide.
Interesting interview from Time magazine this week with Intel president and CEO Paul Otellini, discussing to what extent technology will suffer in this economic downturn. I liked it for its broad assessment of technology from both an enterprise and consumer perspective. Some highlights:
Otellini: “Whether it’s for work or entertainment or resume creation, computers have become an indispensable tool in the daily lives of over a billion people, and there are another billion people who are going to buy them in the next few years, so that’s a different dynamic than we had in the past.”
This came during a discussion of whether people will stop buying computers during bad financial times. The reporter pointed out that he has a BlackBerry (presumably indicating that he could access the Internet without a desktop or laptop), but Otellini laughed and wished him luck on writing a full story using a BlackBerry. He has a point. I love my iPhone and will often use it to check my email and read news online even when another computer is available. But type a full story on it, or take full notes on it while attending a conference? Forget it. (Hint, hint, Apple: A copy-and-paste function would be much appreciated.)
But how will the economic downturn affect the financial services sector, a huge consumer of technology? You’d think the financial crisis would have an impact but, apparently, Otellini doesn’t think so:
Otellini: “Financial services, before the meltdown, represented about 15% of our server business; servers represent about 20% of our [total] business — so it’s not significant overall. And it won’t go to zero — everything I’m reading points to more, not less, regulation. That stuff is going to require tracking software. Sarbanes-Oxley led to significantly more IT spending.”
Otellini makes a good point. Although many companies are laying off employees — or shutting down entirely — those that continue to do business must be even more diligent about adhering to local and federal compliance guidelines. Nothing says bad PR — and the loss of vital customers — like facing a good old-fashioned data breach or being publicly cited and slapped with a fine for noncompliance.
Now, for a bright spot, from Otellini’s perspective:
Otellini: “The big growth driver over the last couple of years has been notebooks, and that’s not changing. There’s a shift from desktops to notebooks, and a shift within notebooks to come down in price as volume expands. Both of those trends are very good for us. We have entered a new class of notebook machines called netbooks, which are small machines with 10-inch screens. You don’t use them for content creation, but they are great for simple things like surfing the Net and email. And they’re taking off. They’re at great price points, so you see this situation where people that couldn’t afford computers before are buying them — and as prices come down, that’s just going to continue.”
Yesterday, I read this Boston Globe article on netbooks; for those really feeling the credit crunch, but who don’t have the money for a souped-up new computer, they sound like an excellent option. Now, is the netbook something a CIO is going to consider deploying to his or her staff? Probably not — business needs dictate the power associated with higher-price models. But it’s always important to be aware of consumer buying trends and consider how those patterns affect how you do business. And, while you’re looking into it, it might not be a bad idea to invest in a few netbooks and keep them handy for yourself and your staff, for trips out of the office when you won’t need to use all the features on your larger, bulkier laptop.
The Express Scripts data breach comes with an alarming twist.
Yesterday, the St. Louis-based pharmacy benefits manager revealed that it received an anonymous letter in early October demanding that it pay up or risk exposure of the records of millions of patient members on the Internet. Express Scripts did not say if the extortion letter specified an amount of money. The anonymous letter included the personal information of 75 members, including their names, dates of birth, Social Security numbers and, in some cases, their prescription information, the company said.
In its announcement yesterday, the company said it turned over the letter immediately to the FBI, which is investigating the threat, and hired outside experts to help in its own investigation of the data breach. The company said the 75 members singled out in the letter have been notified, and that it is unaware at this time “of any actual misuse of the information.”
A company website on the data breach and extortion letter states that Express Scripts staff members believe they “have identified where the data involved in this situation was stored in our systems and have instituted enhanced controls.”
One of the largest pharmacy benefit management companies in the country, Express Scripts provides prescription benefits to about 50 million people. The website said the company deploys a variety of security systems designed to protect members’ personal information from unauthorized access.
“However, as security experts know, no data system is completely invulnerable,” said George Paz, chairman and CEO.
“We have been conducting a thorough investigation since we received this threat, and we are taking it very seriously,” Paz said. “We are cooperating with the FBI and are committed to doing what we can to protect our members’ personal information and to track down the person or persons responsible for this criminal act.”
The New York Times said the company has not ruled out the possibility that the data breach was an inside job.
A Wall Street Journal blog says this is not the first extortion attempt involving health records.
“Just last month, the FBI announced the arrest of some guy who allegedly stole a computer server from the Indianapolis office of Medical Excess LLC, a subsidiary of AIG, that contained “personally identifying and health care sensitive information” of more than 900,000 people. The man is also accused of trying to extort AIG for $208,000 under a threat to release the data on the Internet, the FBI said. A spokesman for AIG told us that to the best of the company’s knowledge, no personal information was disclosed.”