“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.]]>
Karen Levy, director of global technology for Debevoise & Plimpton LLP, said that getting face time with the law firm rainmakers is a perennial challenge. They were too busy jetting around the world to talk to you, said Levy, a panelist at the Chief Information and Technology Officers Forum in New York this week.
Recently, Levy’s trainers were asked to do a presentation on Excel at a small subpractice group luncheon they assumed would be attended by junior associates.
“There were 25 partners in the room,” she said, adding, “which gave me a stomachache.” But the sea change gives CIOs an opening.
“I think for the past 15 years at these conferences we have had multiple sessions talking about how challenging it has been to get good training to our lawyers, who are so busy billing hours that it is actually too expensive for us to train them, because there is such opportunity costs,” she said.
“We now have this window of opportunity where they have a little more time, they want to be busy and we can tailor some training classes and keep their professional development going in the period of the downturn,” she said. Her team is developing specific IT education and training for the firm’s lawyers, as a result.
The flip side of that, chimed in Peter Lesser, director of global technology at Skadden, Arps, Slate, Meagher & Flom LLP, is that because the attorneys are less busy, “they call us more.”
His team is seeing an uptick in the number of calls to the call center. “People have so much spare time. If I was to do the math on the number of hours I’ve spent with our technology committee members, in the past eight weeks the hours have gone up tremendously, because even some of those partners are just less busy and they are trying to find ways to fill their time,” Lesser said, adding that it is incumbent on CIOs to take advantage of that time to educate their customers and build stronger relationships with power brokers.
“We have an opportunity to get in front of people that it was hard to get to before,” Lesser 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.]]>
If I may try to add some levity to the situation, the “orphaned accounts” story (particularly the line about one person who was still on the payroll six months after being terminated) reminded me of the first minute from this infamous clip from the film “Office Space.”
Now, I don’t think anybody would question that there are risks associated with leaving employee accounts open following layoffs. When you’re laying off IT folks, it’s even riskier, according to Tucci’s story, since these individuals “usually have the keys to the kingdom” and could wreak absolute havoc. Hmmmm, reminds me of a little IT hack incident earlier this year in San Francisco you may have heard about.
Unfortunately, I think the points touched upon in Tucci’s story might strike a cord with a lot of the people who read this blog – I know they struck me, both on a personal and professional level. It seems unnecessary to immediately disable the accounts of 99% of laid-off employees who wouldn’t dream of downloading sensitive company information. They might have downloaded a picture of a grandkid on their work computer, or may have even been in mid-email when their access disappeared. Yes, their computers belong to the company, but shouldn’t these employees have an opportunity – even if it’s brief and monitored by current staff – to recover those items? I believe so.
Precluding former employees’ access to their contacts and working documents with little or no warning could be bad for the business, too. Particularly if a company is laying off longtime employees who might have hundreds of contacts built up in Outlook, or have files that would be useful to others in their organization. If the employee is immediately locked out, then recovering and piecing through that business information is likely to be a lot more challenging for remaining co-workers.
And yet … I sure wouldn’t want to be the head of IT in a company that took a lackadaisical approach to disabling employee accounts after layoffs and was burned by one of the 1-percenters who caused problems in the system.
So for any of you with experience in layoffs: Have you gone with immediate system lockout, or ever considered a less drastic approach (for the reasons I cite above, or others)? Do desperate times call for Draconian measures, or is there room for a more personal touch?]]>
The typical missive usually begins with some global statement about HP helping IT deliver better business outcomes. Then rapidly devolves into a dizzying catalog of product enhancements and new integrations and, of course, the array of HP services for those IT departments that can’t figure out the new integrations and enhancements on their own. The HP point person cheerfully gets on the phone to sort it all out, but in the end, I realize I’d have to be on much closer speaking terms with the world’s largest technology company to understand what was new, newish or just another name for something HP announced seven months ago…
But today’s HP news (enhancements to its business technology optimization, aka BTO, software) came with a little jolt — namely that there is no more business as usual, even in HP press releases. Right there in the headline was a pitch worthy of a car company: “New HP Software and Zero Percent Lease Financing Helps CIOs Respond to Tough Economy.”
It occurred to me that this must be very expensive software to warrant 0% financing. Unfortunately, HP doesn’t get into how much it costs with the press. I did find out the offer ends Jan. 31.
The software, from what I can glean, sure sounds nifty — a big brain to keep track of all your IT parts and help you figure out how best to use them. (According to the release, it saved “a leading health care provider” $30 million. Who knows what it could do for you?)]]>
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.]]>
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.]]>
Both Gartner Inc. and Forrester Research Inc. beat earnings estimates for the third quarter. Gartner’s quarterly profit of 19 cents a share easily beat Wall Street estimates of 12 cents a share, sending shares up some 6% on Thursday. Forrester shares beat analysts’ estimates by a penny, sending its shares up 9% on Wednesday. Sales were also up at both research houses. Gartner saw third-quarter revenue rise 11% from a year earlier, to $297.3 million. Forrester’s revenue came in at $59.1 million for the quarter, up more than 15% from a year ago.
Cautious optimism was the watch phrase from both firms. Forrester chairman and CEO George Colony pointed to new clients added in the third quarter as a sign that the firm’s “role-based strategy” remains relevant. Gartner CEO Eugene Hall noted that the firm’s events business showed signs of slowing in July, prompting Gartner to trim its revenue outlook for 2008, but 2008′s profits are expected to beat the firm’s earlier estimates.]]>
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]]>
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.]]>