The responsibilities of the CIO span a spectrum of managerial tasks, with one end of the spectrum as "supply" - the delivery of IT resources and services to support business functions - and the other end of the spectrum as "demand" -the task of helping the business innovate through its use of technology. Many CIOs admit that balancing both demand and supply is a difficult task. Fortunately, the CIO has a range of new opportunities and tools to help him manage and order these competing priorities. The process starts with an understanding of how new sourcing models can liberate internal resources and funding for strategic business enablement and innovation.
While every CIO plans aligning IT and business strategy, the irony is that they don't have enough time for effective strategic planning. Usually they blame it on demand-side pressures.Look at the challenges confronting the CIO: The business side complains that their CIOs aren't up to speed on issues confronting the business and can't think through the implications of systems trade-offs, on a business-unit level, for planned implementations or proposed IT investments. At the same time, the business side usually gets confused in making assessments of the relevance of new technologies to safeguard their business competitiveness. More often than not, business leaders say that their CIOs are not proactively bringing them new ideas about how technology can help them compete more effectively.
Part of the problem stems from the inherent conflict of managing supply and shaping demand. CIOs often must meet requirements to reduce total IT spending, for instance, while making investments to support future scenarios-even though these upgrades will increase IT operating costs. It's indeed a tough job - trying to be both a cost cutter and an innovator - and the CIO sometimes compromises one role. Structural issues whereby parts of the organization are under the control of other executives also complicate the job. Business-unit leaders want more IT leadership, but they are wary of CIOs who don't tread carefully along business leaders' boundaries. Strategic IT management calls for making improvements on the demand side. Managing the demand side of the equation broadly covers: - The financial understanding of costs and benefits, - Business accountability for IT and - Clear framework for investments in technologies. CIOs shift their attention to different aspects of these three core components. As part of the evolution the CIOs shift focus: once operations are stabilized and business credibility has been achieved, emphasis shifts toward working more closely with business leading to opportunities to contribute to strategic initiatives and direction.
In practice, it can be seen that CIOs who meet and exceed business expectations get rewarded with greater participation in their enterprise's business strategy, higher budgets and become favorites with the business side. In most cases, these CIOs tend to have the ear of the CEO through a direct reporting relationship. CIOs need to know not only what the differences are but also how to time the shift; move too soon or too late and credibility with business leaders will suffer.
This month IBM released its findings from the new global study of more than 2,500 chief information officers (CIOs), covering 19 industruesindustries and spread across 78 countries. The study confirms the strategic role played by CIO’s in making their business become visionary leaders of innovation and financial growth. Many CIO’s are getting much more actively engaged in setting strategy, enabling flexibility and change, and solving business problems, not just IT problems
The report replete with innumerable insights is an excellent collection and I started by looking at understanding some themes and associated metrics that preoccupy the CIO’s the most . I was startled to find that more and more CIO’s appear to be genuinely focusing on getting the growth lever of IT and business fire by rightly turning their attention in increased measures towards innovation. Someone quips overtime the role of the CIO is less and less about technology and more and more about strategy. Really hitting the nail on the head. As the role of the CIO itself transforms so do the types of projects they lead across their enterprises, which will allow CIOs to focus less time and resources on running internal infrastructure, and more time on transformation to help their companies grow revenue. CIOs are transforming their infrastructure to focus more on innovation and business value, rather than simply running IT. The report finds that today’s CIOs spend an impressive 55 percent of their time on activities that spur innovation. These activities include generating buy-in for innovative plans, implementing new technologies and managing non-technology business issues. The remaining 45 percent is spent on essential, more traditional CIO tasks related to managing the ongoing technology environment. This includes reducing IT costs, mitigating enterprise risks and leveraging automation to lower costs elsewhere in the business. Obviously not every CIO would make the cut. It’s reported that High-growth CIOs actively integrate business and IT across the organization 94 percent more often than Low-growth CIOs. The study notes that CIOs spend about 20 percent of their time creating and generating buy-in for innovative plans. But High-growth CIOs do certain things more often than Low-growth CIOs: they co-create innovation with the business, proactively suggest better ways to use data and encourage innovation through awards and recognition. 56 percent of High-growth CIOs use third-party business or IT services, versus 46 percent of Low-growth CIOs. The study also found that High-growth CIOs actively use collaboration and partnering technology within the IT organization 60 percent more often than Low-growth CIOs. Even more impressive, High-growth CIOs used such technology for the entire organization 86 percent more often than Low-growth CIOs Successful CIO’s , the report notes actually blend three pairs of roles. At any given time, a CIO is: • An Insightful Visionary and an Able Pragmatist • A Savvy Value Creator and a Relentless Cost Cutter • A Collaborative Business Leader and an Inspiring IT Manager
Adjusting the mix one pair at a time, the study reports make the CIO’s perform tasks that make innovation real, raise the ROI of IT and expand the business impact.
Other key findings of the survey: • CIOs are continuing on the path to dramatically lower energy costs, with 78 percent undergoing or planning virtualization projects • 76 percent of CIOs anticipate building a strongly centralized infrastructure in the next five years. IBM's CIO Pat Toole has this to say about the findings. In addition to the detailed personal feedback, IBM also incorporated financial metrics and detailed statistical analysis into the findings.The report also highlights a number of recommendations from strategic business actions and use of key technologies that IBM has identified that CIOs can implement, based on CIO feedback from the study.
Just arrived in Australia to see IBM announcing the acquisition of Telelogic. An interesting buy – while many see it as a complementary purchase to Rational – it is much beyond that. Telelogic is a leading vendor in the areas of business requirements management and IT (object-oriented analysis and design) modeling and code generation with tools such as DOORS, TAU, Telelogic Modeler and Rhapsody. Quite recently, Telelogic acquired a leading BPA tool in Popkin's System Architect and has been integrating it into its portfolio in support of enterprise architecture and application development. Few quarters back, Telelogic announced the release of Telelogic Modeler, a free-of-charge UML design environment for engineers, designers and developers of embedded, real-time and enterprise IT applications. Telelogic Modeler has the potential to foster follow-on complementary sales for Telelogic's other model-driven development and application life cycle management tools, such as Tau, Rhapsody, Doors and Synergy. A study of these tools make interesting reading :
System Architect (SA) and Telelogic's other tools appeal to the architect category of buyers. SA also appeals to the BP and BPMS modeler categories of buyers. The requirements management capabilities of DOORS, coupled with the ability to feed models from SA to TAU or other leading IT modeling tools and BPM tools is a testimony to its versatility. SA was also known for its strong simulation capabilities that are instrumented for BAM feeds among all three BPA categories of buyers Recent estimates suggest that it had a little less than 10 % share of market revenue. Telelogic is seen as a good players and is seen as a visionary compared to several of it BPA peers. This continues the tradition of IBM cherrypicking good candidates from emerging spaces - Filenet, Maximo etc. With this acquisition, a reasonably priced one at that, I see IBM has armed itself well to storm into the BPA space with this acquisition. Other players like Ultimus, TIBCO and the like now have a formidable competitor to reckon with.
This is a continuation of Bob Cringley's latest post on IBM. Any change is painful - massive change would bring out more massive upheavels - this is true of all organizations around the world. I have no idea whether Bob's information is right or not - am assuming that he has all the facts with him. Since it aligns with general news that we hear in the marketplace, it is worth examining the changing marketplace and leave it for readers to assess if IBM is indeed making the right moves. Recent studies of the global services market clearly rank IBM Global Services as the he largest services vendor in the world – a position it has held for more than a decade. It reportedly reported $48bn in sales in 2006 - this is more than double that of its closest competitor EDS, with $21.3bn. IBM’s individual market share stood at 8.7%, and the services market is highly fragmented. The point to note here is that IBM’s top line rose by just 1.8% last year, a consequence of slow contract signings in previous years. In contrast, some of IBM’s closest competitors – notably EDS, Fujitsu and Capgemini - reaped the benefits of successful restructuring programs during the last few years to return healthy growth rates of 7.6%, 8.3% and 10.3% respectively.
To understand the way the top 50 service players are executing lets looks at this - The top 50 IT services vendors employed 1.7 million employees at the end of their most recent reported financial years. This is almost an increase of 13% of the comparable total of 1.5 million from the previous year. Much of this growth has been driven by the major offshore sourcing suppliers, with the top five players adding 88,000 new staff last year taking their combined total headcount to 307,500. TCS, Wipro, Infosys, Satyam and Cognizant are poised to add a further 100,000 new recruits between them in fiscal 2007. Its just not the scale that matters alone. I firmly believe that investments make the difference in securing the future of service players. The whole service industry and enterprise software industry plays on the customer inertia and lack of an alternative. Whats that disruptive model that would shake up the services industry – clearly offshoring played that role to an extent but the laggards seem to be catching up here/atleast make up an appearance of catching up. Seen from a service industry perspective, next technology breakthrough heralding new opportunity could help them rejig their model – like what BPR/ERP wave did earlier or the dot com era – SOA is still many years down the line. Seen from a customer perspective, how does one lock themselves out of this ? Seen from an investor perspective, how to value service companies where increasingly the differentiation factors seem to be just the scale and historical presence.These are definitely key concerns. Innovation inside consulting and service organization needs a different mindset to foster and manage - clerical approach shall have deleterious effects. The key thing would be to see the level of innovation and differentiable IP’s that service firms can showcase – this needs to be tied to increased productivity and reduced cost for customers. Ultimately, service players that have invested in emerging areas well ahead and in right measures, stayed close to customers, and focused on efficient execution are well positioned to capitalize on the market as it improves. Companies that will succeed in the services market going forward will be those that embrace the evolution of the software environment, collaborate closely with partners and customers, possess a strong understanding of industry-specific business processes, and have a mature and seamless global delivery capability – all these are achievable only by making right quantum of focused investments in the right direction at the right time. So, if you want to see where the well established service firms are headed – I would think look at their business model, closely scrutinize the investments that are being made – the quantum & nature of such investments. All other things being equal, this would make the difference between winners and laggards. IBM's reported move as spelt out by Cringley shold be seen against this background of global change and challenges that service players face moving forward.
Months back, Bob Cringley wrote IBM- Disaster In The Making. In an update post he writes, problems continue to abound within IBM writes,Bob Cringley. He thinks that close to last weeks layoffs of 1300 people,another 100,000+ layoffs would no later than the end of this year. He explains,LEAN, an IBM initiative is aboutoffshoring and outsourcing at a rate never seen before at IBM. He estimates that for one overseas hire within global services, one may get the axe in the US. This, he contends is aimed at eliminating 150,000 posiitons within the US. He adds, initiatives are on within IBM to identify common and repetitive work now being done that could be automated or moved offshore, and to find work Global Services is doing that it should not be doing at all. Implicit in LEAN is that Global Services will be eliminating not just employees but customers, too - customers whose contracts were underbid and whose projects may never be profitable for IBM.All this is supposed to happen by the end of 2007, by the way, at which point IBM will also freeze its U.S. pension plan. there is a broad expectation at all levels of IBM familiar with the LEAN plan that it will cause huge problems for the company. He concludes that this may just speed up the death spiral of IBM. (All these are Mr.Cringley's view).
In the follow up post to this, let's see whats changing in the services marketplace.
Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld "All views expressed are my personal views are not related in any way to my employer"
