First, Tech Mahindra Ltd., which purchased the troubled IT outsourcing company two months ago, following the Satyam scandal, has officially rebranded it as Mahindra Satyam.

Secondly – and, I think, more importantly – Satyam is looking to cut jobs if orders coming into the company continue to languish. According to this article, 8,500 employees placed in a so-called “virtual pool” might see their positions eliminated in six months if the company fails to find them work.

Satyam’s staffing troubles aren’t surprising — it must be difficult to woo new Satyam customers or retain those with expiring contracts, given the past transgressions of company leaders. Considering all that, I’m a little surprised that the new owners are leaving Satyam in the company’s name at all. As a point of comparison, after ValuJet Airlines experienced a series of safety problems and the fatal crash of ValuJet Flight 592 into the Florida Everglades, it changed its name and is now operating as AirTran Airways.

Since the Satyam scandal broke early this year, IT outsourcing and offshoring clients have struggled to parse through fact and fiction, protect existing contracts and wise up when pursuing new IT outsourcing deals. As the recession deepened, we began to hear that companies were seeking cheaper rates, sometimes in exchange for more flexibility on the part of the outsourcer in how work is completed. More recently, it seems that insourcing – bringing previously outsourced IT work back in-house – is on the rise.

So what role has the Satyam scandal played in these trends? I recently asked Ben Trowbridge, CEO of Alsbridge Inc., a U.S.-based IT outsourcing and business process optimization consulting firm, whether the scandal was sticking in his clients’ minds.

“Yes – but it’s amazing how short a memory clients have for bad news,” Trowbridge replied. “Within a month of that being brought to a head, it was like everybody had forgotten about it.”

This wasn’t the answer I was expecting. Google’s AdWords tool tells me that the term Satyam is still being searched quite a bit. So I’m putting the question out to enterprise CIOs: Has the Satyam scandal had any effect upon your company’s IT outsourcing and offshoring activities in the past six months? I’d love to hear your stories.

The Balanced Scorecard is a performance management methodology that helps executives develop and measure strategic corporate objectives and make sure that everyone in the company is aware of his role in making the corporate strategy a success.

A lot of that methodology involves setting objectives and measuring those objectives. For example, Southwest Airlines had an objective of faster ground turnaround times for its planes. Executives did not measure this by timing takeoffs alone, but by how many ground crew employees were stockholders. In other words, being a stockholder would motivate ground crew to get the planes off the ground faster. More importantly, executives measured the success of this objective based on how aware the ground crew was of this objective and how it related to the airline’s overall corporate strategy.

One CEO at a financial services company drove the message of corporate alignment home by walking up to random employees with a corporate strategy map in hand. A strategy map is a visual representation of a corporate strategy that charts out the objectives of an organization, such as to increase employee satisfaction, and shows the link between that objective and how it will be implemented and measured. The goal is to show the cause and effect that objective has across several perspectives: financial, customer, internal business processes and learning and growth. A measurement linked to the employee satisfaction improvement objective could be employee turnover rate, for example.

This CEO would place the map on the employee’s desk and ask:

Do you know what this is?

Can you explain to me what this is?

Can you explain what you were just doing on your laptop and how it applies to our strategy?

The point of this exercise was not to instill fear in employees, although it did; the point was that internal email traffic exploded after an employee received such a visit, with everyone saying, “You better be prepared to answer these three questions.”

The CEO accomplished his goal of making sure employees knew what the corporate strategy was and their roles in making it a success.

The CIO should be taking a similar tack, or the IT department may find itself outsourced, Kaplan warned. Your success is tied to the success of your customers, the business users. You must be aligned to their needs.

“You should know what your value proposition is in the overall strategy and link your strategy to that of the business users,” Kaplan said. “That’s how you can sustain your existence and not be replaced by an Infosys [outsourcing company].”

So are you prepared to answer those three questions?

“Why are people at my door asking for more work, when I have less dollars to do it?” asked David Cagigal, CIO for Alliant Energy Corp. “Some of the customers just don’t get it.”

The lunch was an invitation-only precursor to the Fusion 2009 CEO-CIO Symposium put on by the Wisconsin Technology Network. Cagigal was responding to the lunchtime talk given by Ajei Gopal, executive VP for CA Inc.’s products and technology group. Gopal gave a progress report on his company’s reorganization since the scandal-ridden days before former chairman and CEO Sanjay Kumar went to jail for improprieties related to his job, and to deliver the message that now is the time for bold action. While it may be seductive to stop spending, CIOs should be investing in long-term strategies that break down information technology silos and weave IT into every aspect of the business so that CIOs see what they need to see and respond appropriately to provide the business with (ready for the next proverbial?) end-to-end IT services.

In CA’s case, the internal strategy is not so much on gee-whiz technology, he said, but in tying technology together in innovative and novel ways to serve the customer. Moreover, Gopal predicted that in the vendor world, the integrators — not the point-solution companies — will prevail when the upturn comes because customers, too, will be looking for end-to-end solutions. (Unless, Gopal, they don’t work.)

The spiel was met with some pushback. Alliant’s Cagigal pointed out that CA was ahead of the curve, fortunate to have reinvested in its technology strategy before the crash. How do you convey the need to optimize the business now?

Another CIO observed that IT transformation is a good deal easier at a company whose business is technology than at an organization such as hers — the Wisconsin Department of Children and Families. “The challenge I have as a CIO is to try to help translate the investment of IT to the mission of the agency,” she said, to bosses who don’t understand IT well enough to appreciate the argument. If money becomes available, the agency’s instinct is to hire more social workers rather than sort through how IT could make the current workforce more efficient. (And when the need is urgent, who’s to blame them, as IT transformation doesn’t happen overnight.)

Frank Ace, CIO of the Wisconsin Department of Justice (DOJ), echoed that sentiment. For the DOJ, getting more law enforcement on the street will always be more important than adding another MB. Frank said that IT may be a victim of its own brag: The industry does promote IT as the tool that can help organizations to do more with less. And now CIOs may be caught in a trap of their own making. The cost of IT has slipped down the list of priorities for many organizations.

If you follow the trend of doing more with less, eventually you’ll do everything with nothing. IT’s a slippery slope, Gopal agreed.

“The positioning of the value of an incremental dollar spend in IT versus on something that might be seen as the first line of defense, whether it is cops on the street or social workers, is difficult.”

But it is a case that has to be made on value, Gopal said. “That is the conversion you have to make. You can’t talk about a Unix administrator, but the outcome of having that Unix administrator.”

And what happens when the recession basically turns business goals upside down? One audience member wanted to know what happens to IT shops that, like CA, forged a long-term strategy to meet business goals, when those goals no longer exist? The market trend upon which the IT investment is predicated is no longer viable.

The question was met with a kind of grim silence from Gopal and the audience — a reminder of how cataclysmic this recession has already been for some companies.

This being the Midwest, the hand-wringing did not go on too long without a rejoinder. An IT executive with Kohler Co. admonished the audience not to whine. CIOs are working themselves into a lather about cost reductions, but everybody across the company is feeling the pain. And the worst thing IT could do now is single itself out as a victim. “You will generate a lot of resentment among other staff,” he said.

Japan’s NEC to Cut 20,000 Jobs, Posts Wider Loss ; (today, 5:34 a.m.);

Kodak to Cut [3,500 - 4,500] Jobs Amid Sales Slump (Thursday, 7:43 a.m.)

Ford Posts $5.88 Billion Loss (Thursday, 7:29 a.m.)

Starbucks to Close 300 Stores, Cut Nearly 7,000 Workers (Wednesday, 4:20 p.m.)

Wells Fargo Posts Loss; Wachovia Loses $11 Billion (Wednesday 8:53 a.m.)

Japan’s Nomura Posts $3.8 Billion Loss (Tuesday 1:51 a.m.)

Worst of all was Monday, which set the tone for the week with 35,000 layoffs announced before I’d had my second cup of coffee. By the time the day was over, the layoff total was something like 62,000, including:

Sprint Nextel to Cut 8,000 Positions (Monday, 8:17 a.m.)

Caterpillar to Cut 20,000 Jobs (Monday, 8:25 a.m.)

Home Depot to Cut 7,000 Jobs, Close Expo Home-Design Business (Monday, 9 a.m.)

Since the downturn-cum-recession began, tech companies have also been in the mix, as have companies of all sizes in many industries — supply chains for financial services, housing/construction, cars, consumer goods, media (especially newspapers) among them. Most of the layoff announcements don’t go into any detail about who’s being let go or why; we all know there’s probably restructuring involved (i.e., layoff survivors Joe and Mary can now do two jobs each, and Sid and Tom will be underemployed for a while) and that the cuts probably involved IT.

In one layoff where I knew some folks who were let go, the IT tally was almost 25% of the reduction in force. Why? Many projects were canceled. In fact, many organizations are finding that their project management office is busier than ever, helping to choose what’s still essential and, sadly, what must go under the guillotine.

How else are organizations hanging on? Recent research by our SearchCIO.com site found that more than 40% of 319 respondents have had budget cuts so far this year. Other organizations are resorting to the kind of outsourcing we saw in the ’90s, like Warner Brothers divesting IT to Cap Gemini, which will hire back a portion of the employees.

As the recession continues, as most experts now say it will through at least most of this year, many of us (layoff survivors and all) are simply hunkering down, making the best of sparse resources and finding creative ways to stay energized and hopeful for the projects that remain. The new administration in Washington may also have something to do with this. How are things at your organization?  What are your survival techniques, innovative shortcuts, techniques for staying optimistic? If anything, community is one thing that will keep us all going, so let’s talk about it here.

I just read an article about breaking down the silos in IT. This piece focused on the application development process and the fact that each group does its thing and then tosses the application over the wall to the next group, from developers to QA engineers to performance test engineers. The problem comes in if all this testing is performed on a “utopian network” on the LAN, so nobody sees how it will perform on a WAN. So when users experience problems due to latency or packet loss, they blame the networking guys.

This is classic siloed, need I say territorial, behavior. The irony is, everyone in IT bemoans the fact that so much of the enterprise functions in stovepipes that it’s a huge effort to lead projects that should be joint efforts across departments or functions. Departmental interests, power struggles and personalities get in the way of effective enterprise IT projects so they don’t get off the ground or the end result fails to meet expectations or isn’t strategic after all. In fact, IT could figure out how to break down silos by starting at  home.

It’s really not that hard. The next time you have a brainstorming session or launch a project, seek out representatives from across IT. Get their input throughout the process. Figure out what new processes you may need to create to consider their (and in the end, everyone’s) interests so that your outcome is solid and thoroughly represents the best you can do. If it’s an application you’re building, your project committee will include people from the user community; add an IT subcommittee with people from every part of IT that the application will eventually touch.

Inclusion is a management philosophy, and it gets conflict out on the table early on. Better to hash out your differences before spending the company’s money and then needing to spend more to patch something later on. Any eye-rolling or “but…”s around the room will turn into greater pride and less maintenance at the end.

It seems the old IT/business alignment thing still needs aligning.

The silver lining, if you can call it that, is that this disjunction is actually a step forward. Instead of having IT and the business disagree about IT’s purpose, now at least both groups are on the same page.

Both CIOs and their non-IT executive peers have reached concordance on the idea that IT should play an important role “in developing and executing business strategies” by, for example, promoting innovation to “better enable companies to seize new opportunities.”

The bad news is that what’s on that page is not actually what is going on in these companies.

For example, only one quarter of the respondents believe that IT is currently “partnering with the business to develop new business capabilities.” Similarly, only one quarter believe that IT is “proactively engaging with business leaders on new ideas/enhancements to existing processes, systems.”

The other evidence for this disjunction between what is and what could be is the respondents’ answers to questions about current IT priorities versus ideal IT priorities for the next budget cycle.

For example, “reducing IT costs” and “ensuring compliance with regulations,” according to the survey, should ideally be half as important on the IT priority list as they currently are. On the other hand, the respondents said that in an ideal world,  IT’s role in “creating new products and service” should be almost double in priority.

For the new year, perhaps CIOs and their business peers can take heart in the idea that the first step in solving a problem is defining it.

The survey was conducted in October, after respondents “had time to absorb the implications of … the deteriorating economic environment,” said McKinsey authors; 548 executives responded, 49% of them identified as C-level executives.

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.

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.

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.

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.