A Survival Guide For CIOs

A Survival Guide for CIOs

Dale KutnickSenior Vice PresidentGartner Executive Programs

© 2009 Gartner, Inc. All Rights Reserved.

Business expectations for IT focus on current operations and performance

* Item not included this year


1. What should I be listening for from my executive peers as the year goes on?

2. How do I know that executives are changing direction, priority and emphasis versus floating new ideas?

3. How do I work with the CEO to deliver the business results in a changing environment?

4. How do I influence those ideas to take advantage of current IT projects and resources?

Decrypting the CEO and Business


Unlike the Last Recession, IT Is Not the Problem — But When Priorities Are This Serious, IT Cannot Be Immune

9%

25%

45%

53%

68%

0% 20% 40% 60% 80% 100%

Cutting operating costs

Increasing revenues

Preserving cash

Sourcing fresh capital

Liquidating assets

Source: Gartner business executive survey 2009 (unpublished) n=150


Indeed, in Business Leaders’ Eyes, IT Is One of the Solutions —So Count Yourself Lucky — And Proceed With Grace

15%

16%

22%

23%

23%

24%

24%

29%

33%

33%

35%

39%

47%

48%

48%

0% 20% 40% 60% 80% 100%

Product enhancementInformation Technology

SalesRisk Management

Research & DevelopmentMarketing

People & culture developmentPartnerships, alliances and value networks

Intellectual propertyLegal and ComplianceProperty and facilities

Capital equipmentStaff (hiring)

Business ServicesNone of the above


For each of the following business areas within your organization, indicate whether investments in 2009 will increase compared with 2008.


32%

46%

61%

61%

0% 20% 40% 60% 80% 100%

Our technology platforms (software,telecoms, hardware)

Our internal IT department resources

Business department users ability toexploit IT systems

Our external IT services providers

Business Leader Views of IT Capability Improvement Priorities



60% of business leaders think their current enterprise ITcapability CONSTRAINS their choicesSource: Gartner business executive survey 2009 (unpublished) n=150

Perhaps This Is One Reason Why


A Technology-Enabled Enterprise FrameworkA Technology-Enabled Enterprise Framework

Corp. View

IT measurably enables a new/renewedprocess

IT services are

integrated across

entities or tangential business processes

“Services”delivered as expected, based on established metrics

Execution Excellence

Innovation &

Transformation

PervasiveIntegration


What Is the CEO’s Perspective on IT Execution Excellence?

Drives efficiency/productivity improvements (automation = lower costs/revenues in HR, IT, Fin &Accounting, Production, Distribution, Customer Mgmt, Sales, Mktg, etc)

Creates real-time business measurement to better enable governance, planning, operations, agility, etc.

Provides risk mitigation/predictability of IT-led initiatives; protects corp information assets; avoids costly outages.

Delivers DEMONSTRATED value to the business via credibility and gained trust with business leadersExecution excellence is the platform for CIOs to gain trust via tangible, renewable, and measurable delivery of service quality


Financial restructuring (such asFinancial restructuring (such as deleveragingdeleveraging))

Industry restructuring (such asIndustry restructuring (such as players failing)players failing)Corporate restructuring (such asCorporate restructuring (such as entity consolidation)entity consolidation)

Organizational restructuring (such as layoffs)Organizational restructuring (such as layoffs)

CEO Issue No. 1: Restructuring


Many IT organizations are organized around IT assets.

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CIOCIO

IT Area1

IT Area1

IT Area2

IT Area2

IT Area3

IT Area3

IT Area4

IT Area4

BusinessRequirements

Doc

UserAcceptance

Test

FunctionalSpecification

DetailedDesign

Implementation

LineTest

IntegrationTest


Services Delivery Based IT Organization

CIOCIO

Business Facing Domains

Application Management

Professional Services


CEO Issue No. 2: Can't Write-off Fast Enough

Assets we don't needDebts we won't recoverOld assumptions & plansInvestors who won't playStaff we can't payManagers who can't. . .Partners we don't need

Mustdump..


Write-Off: IT Agenda Impact

To support high / peaky PR-related activity

Many and varied BI special requests

Emergency due-diligence requests

Requests to split systems for divesting

Pressure on HR and security systems & processes (severance, talent raids)

Minimum lash-up acquisition integration requests

Sourcing based on financial re-engineering

"Zombie" projects without direction or cancellation

BEWARE the "I'm not seeing it" gap BEWARE the "I'm not seeing it" gap the restructuring dominoes fall slowlythe restructuring dominoes fall slowly

CIOs should expect …


CEO Issue No. 3: Loss of Business Trust

It seems anybody could go bust any minuteSystemic opacity exposedThe trust of decades trashed in hoursHuman decision makers made frail by the speed of the programmed & connected world

There isn't enough trust to go around

"I believe in capitalism. I also believe there is a role for government. Raw capitalism is a dead end. I've seen it" US Treasury Secretary Henry Paulson in Fortune - 6 Oct. 2008

Seeds of Radical Change

"An economic Pearl Harbor" – Warren Buffet, September 2008

"The world financial system is becoming multipolar" - Peer Steinbrueck, September 2008

"The first casualty of economic downturn is the truth"– Luke Johnson, Chairman Channel 4, FT October 2008


Business Trust: IT Agenda Impact

New interest in: - Reputation management - E-discovery- Business intelligence

Strengthening of "data-driven" management culture:- Return of "real-time enterprise" thinking

Information transparency: - Leading to acceleration of external feeds (e.g. XBRL)

Possibility of business taking social/open/Web 2.0 seriously …


EffectivenessEfficiency

BusinessPerception

ofDependency

onInformation

Business Perception of Credibility of ITHighLow

Hig

hLo

w

Inve

stm

ent

Cost

•Trust

•Respect

•Collaboration

70%25%

5%

Business/IT Relationship Effect on Role


Business Perception of Credibility of ITHighLow

Hig

hLo

w

Inve

stm

ent

Cost

EffectivenessEfficiency

Supporting the

Business

Acting like a business

Acting as the

businessBusiness

Perceptionof

Dependencyon

Information

Business/IT Relationship Effect on Role


CEO Issue No. 4: Globalization InstabilityTwo-speed economy tensions rise between fast-growth East and flat-growth West.

Global counterbalancing strategies of growth, risk and currency need reappraising.

High cost of oil causes location and transportation topology rethink.

Potential for trade disagreements.

Return of Russian bear & growth of Chinese military.

Unknown U.S. regulation scope.

Labor migration constraints amplify talent shortages.


IT Agenda Item: Emerging Market Globalization Requires a New Enterprise Topology

From Industrial Networks To Frictionless NetworksLinking 20th-century industrial control centers

Balancing 21st-century activity volumes

• Your enterprise architects must have a network-centric mind-set.

• The cloud presents new opportunities for global speed and elasticity.


CEO Issue No. 5: New Major Regulation Coming

Difficult to know type or scale of impact.Don't mistake sudden stop-gap regulatory intervention for the real thing.Likely to be aimed at redefining free-market structures — to make them work.New questions about "social model" capitalism.Likely to be about policy rewrites and interventions, not "superficial transparency." No "SOX 2" — because SOX 1 didn't work."End of Reaganomics era" — watershed —ramifications will extend far beyond financial services.The words "too big to fail" will be at the center of the debate (note U.S. automotive industry bailout).

IT impacts: Major, but details are too early to say.


CEO Issue #6: Many CEOs Will be Interested in Serious Enterprise Innovation

DHLDHL Has a dedicated innovation center. It is developing an RFID “smart sensor” tracking service for high-value, cold supply chain items.

HarrahsHarrahsCIO Tim Stanley was first to market deploying “surface computing” in a casino bar in 2008. The table-like multitouch display offers games, cocktail “mixology” and dating.

Procter &Gamble

www.dhl-innovation.de/en/

www.cisco.com/telepresence

www.microsoft.com/surface

One way CIO Filippo Passeriniis helping meet CEO A.G. Lafley's imperative to improve collaboration between countries: 300 “telepresence” HD video-conferencing suites.


Innovation at Transport for London

Figure 1. Transport for London sites at the center of an information based value network that influences customer transport decisions that benefit the individual traveler as well as all travelers moving through London.

Figure 2. Transport for London uses information, process, and behavior to benefit the more than 10 million commuters moving through London each working day.


Techtonics: 2009-12+Pervasive connectivity Information utility ubiquityErgonomic interfacesInfo storage & mgmt Communications standards convergenceSocial networksCloud computing

Techtonics enable rapid technology, business, and societal innovation

Permanent Disruption …


How Does the CEO Measure IT-Infused Innovation?

Does “automation” enable processes to be combined, eliminated, or permutated to (mix of the following):

- Cut costs?- Cut time to market (for goods, services)?- Introduce products faster?- Read the market more accurately?- Enable BPO, where business-justified?- Better balance assets, inventories —

people, tools, etc?- Form partnerships more quickly?- More flexibly adapt to market conditions?

The CEO is seeking architected approaches that drive current and/or future revenues and profitability

The ProcessThe Process

CEOEliminate?Eliminate?

Combine?Combine?

Mix?Mix?


Collaborating to Drive Innovation

Combinatorial innovation takes center stage –measuring collaborative coefficient - Ranges from M&A to joint ventures to. . . - Must have open, well-defined business “interfaces” to enable “pervasive partnering”

- Must better document and rationalize processes- Competition evolving from enterprises (vertically integrated) to global ecosystems


Getting to IT-Infused Process Innovation!

IT-infused process innovation changes what work gets done by whom, improving effectiveness, efficiency, and increased accuracy

Deeply understand business evolution/enabling processes

Establish strategic design office; partner with business execs (internal/external) to “juggle” processes

Manage IT budgets and “active agent” personnel to execute on strategic business priorities

Manage skill profiles like staffing agency and move skills with changing roles: Create evolving routines across the business

Build reciprocal measurement into all service relationships

Develop and exploit information assets

Sales

Mktg.

IT

Dist.

HR

Cust.Svc.

Fin.


The relative value of management priorities has changed

Cash – generating free cash flow to support operations and investments (Information and Integration)Customers – raising your share of the best customers in the marketplace (Information)Cost – reducing the operating cost structure of the enterprise and IT (Business Process)Capacity – achieving scale operations in the enterprise and the data center (Virtualization)Capability – enhancing performance of people, products and services (Innovation)Control – improving transparency, reporting and benefits realization (Information and Management)

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IT Imperatives: 2009/10Improve efficiency (e.g., IT costs/revenues) and flexibility

Enable appropriate outsourcing approaches in the context of a business-relevant portfolio management plan

Enable business leaders to manage demand for IT services (via trust, transparency, and discipline)

- Expose old, high-priced applications and tools

Relate (in business/economic terms) the cost, consequences, and impact of IT-infused business processes

Establish and maintain the ITO sub-brand: Ongoing communication on business value and servicesSuccessful ITOs will drive execution, pervasive integration, andtransformation

CEO

The SolutionThe Solution


Finally…..Clear the table (of current plans) and start again

Deliver significant cost reduction: - In both operating cash flow and capital investment deferral- For many, the requested cuts will be double digit*Deliver head count reduction – for ratio realignment

Cancel some major projects

And:

Deal with unexpected acquisitions & divestitures

Manage HIGHER risk taking on projects (for speed)

Work with LOWER procedural obstacles & stronger CIO powers