IT Strategy » CIO

Business needs to shape IT architecture

Raj Sheelvant — Thu, 29 Jul 2010 02:01:40 +0000

The Chief Architect—the overall IT-architecture program leader—is frequently selected from within the technical ranks, bringing deep IT know-how but little direct experience or influence in leading a business-wide change program. A weak linkage to the business creates a void that limits the quality of the resulting IT architecture and the organization’s ability to enforce and sustain the benefits of implementation over time. This according to McKinsey Quarterly article titled “Why business needs should shape IT architecture” which concludes that to get the most out of these programs, organizations must ensure that they are led by people with the right skills, connections, and attitudes.

This is, in my opinion, a main reason why IT implementation usually is not in alignment with Business needs. A technically astute individual who is disconnected from business needs should not lead IT organization. At the same time, non technical person who does not understand the technical capability to solve business needs should also not lead the IT organization. In my opinion, a CIO or CTO of an organization should not only understand IT capabilities but should be able to understand business need. He should be willing to take calculated risk in building software application that automates business process. He should show gravitas within organization so as to influence different organizations to simplify and streamline business process. For this CTO and CIO has to work horizontally (across different departments).

The article notes that as companies innovate, add new business lines and products, or expand their international presence, processes proliferate, and the discipline around them can go out the window. Meanwhile, the IT that underpins these processes can also become more entangled as aging legacy systems jostle with new applications to support the needs of the business. Over time, this kind of complexity can unravel technology standards and undermine the coherence of the architectural blueprint. As application volumes grow in response to a fast-changing economic, regulatory, and business environment, the issue of complexity is becoming acute for many organizations. Enterprise architecture management (EAM), a framework to manage IT architecture and ensure that both the business and IT are well aligned, aims to restore order to this landscape.

Millennials’ Impact on Organization Structure

Raj Sheelvant — Thu, 18 Feb 2010 02:12:26 +0000

Accenture High Performance IT research program titled “Jumping The Boundaries Of Corporate IT“, which surveyed 5,595 students and young workers in 13 countries. It uncovers how the Millennial generation uses technology and confirms the Millennial archetype—global citizen, eager adopter of new technologies, willing to improvise to get the job done—but identifies regional differences for CIOs eager to create a technology environment that enables high performance. Click here for an interactive map showing Millennials’ profiles by country.

The study also finds that these millennials have different skillsets and approaches for solving problems and this has a far reaching implication on the corporations. Information Week article titled “Global CIO: Accenture Millenials Study: The IT Revolution Has Begun” points that “As businesses return to growth mode and start hiring in substantial numbers, they will once again face intense competition for certain skills and top talent. Millennials will be the bulk of new hires over the next two decades, so conventional command-and-control cultures could be at risk in this regard.” Since the companies will heavily depend on these young workers with new ideas, new expectations, and new attitudes, the organization culture has to change. With collaborative mind set, these millennials’ will not be able to function optimally within the current organization structure where innovation plays central role in fostering growth. Decentralized innovation is the future. The Information Week article further states that “Millennials are more intimate with technology than any previous generation. Even high school interns can now add value. Companies that figure out how to tap younger workers’ tech savvy and listen to their ideas in a productive way will likely enjoy an increasingly strong innovation-based competitive advantage. CIOs need to be able to see the massive potential and encourage an environment of shared learning that enriches both traditional workers and the new-wave Millenials. It’s not unlike lots of other revolutionary impacts on the IT world that CIOs have had to learn how to master—except that the stakes might be higher.”

The gist of the study is that the companies are dealing with a generation that’s incredibly knowledgeable and sophisticated about technology and a generation that’s grown up never known anything but ubiquitous, instantaneous, wireless connectivity to everything. It’s imperative that the companies change to take advantage of this new generation.

Business Flow Modeling Critical for ERP implementation

Raj Sheelvant — Tue, 03 Nov 2009 01:48:48 +0000

Great article titled “CIO: Don’t attempt BPM system without mapping process flows” by Niel Nickolaisen on importance of understanding process flow before selecting Business Process Management (BPM) system. Niel writes how he always organizes, streamlines and simplifies transactional processes as part of BPM projects. He says he always manually map processes as part of any system requirements-gathering exercise.

Niel notes that process mapping makes the process visual. With the process visual, he can objectively assess the usefulness and quality of the process steps and find ways to streamline and improve the process. After implementing the process changes, he uses BPM tools to help automate and manage the process. The other advantage of making the process visible is that all the stakeholders can comfortably go to the next step and selecting ERP for BPM.

I think Niel makes a critical point here. Any ERP implementation will not be successful until the business process in mapped into some simple visual representation. The end consumers need to understand and then simplify their business process before implementation of ERP. In the end you not only want to automate the business process but you need to streamline it.

Cisco’s alignment of IT with Business

Raj Sheelvant — Wed, 28 Oct 2009 01:18:51 +0000

For many years, Cisco has grown through acquisitions. Since 1993, the company has assimilated more than 130 smaller firms, including five in 2008 and three so far in 2009. IT department’s role is to leverage the virtualized architecture and collaboration technology to quickly support each acquired company’s business processes. Thus, IT department of Cisco under the leadership of CIO Rebecca Jacoby, intends to lower the acquired company’s costs, while enabling it to add value to Cisco.

According to an article titled “Cisco: Collaboration Is Key to Business”, the ultimate goal of Cisco’s IT organization is to enable business growth and capabilities. IT plays a vital role within the organization, even as the company moves to an unusual committee-based management structure. IT is represented on all 60 committees on the new organization chart, which should help tie the IT department’s top two initiatives— virtualization and collaboration—to the company’s strategic business goals of asserting leadership across an ever-growing roster of businesses.

Virtualization: Cisco’s approach to virtualization encompasses both data centers and applications. By virtualizing servers in its data centers, Cisco is getting the same number of servers to do the work of many more. At the application level, a service- oriented architecture enables Cisco to deploy many applications across a common infrastructure via Web services.

Collaboration: Collaboration technology will be critical to successfully execute Cisco’s new organization structure, which bulldozes operational silos, replacing them with a matrix of committees, councils and boards. Cisco is taking a broad approach to collaboration—one that runs the gamut from social networking to video.

According to the article, Cisco’s IT organization is enabling the company’s push into the consumer products market. Manufacturing, distribution and retailing of consumer products is essentially an exercise in supporting a global supply chain and a global distribution channel.

Thus, with the focus on reducing both the acquization cost and time to market cost, IT department seem to be adding ‘strategic’ value at Cisco.

CIOs Recalibrate Their IT Strategies

Raj Sheelvant — Wed, 14 Oct 2009 01:16:14 +0000

courtesy flickr

CIOs are increasingly open to new, alternative IT operating models, which also could mean new vendor relationships. A grinding recession, paired with new choices in terms of online software, mobile computing, outsourcing, open source, and more, opens the door to this change according to Information Week article titled “Alternate IT”. Article notes that CIOs are rethinking significant parts of their software strategies, considering alternatives to conventional licenses, maintenance, and fee structures, as well as alternatives to lengthy internal development cycles, complex customization, and long global rollouts and upgrades.

Though the ‘alternative’ approaches to software are named differently, they are making software cheaper, simpler, more flexible, and more accessible. Alternative IT models are gaining ground because, in many cases, they make too much sense to ignore. There is an interesting case study with GlaxoSmithKline in this article. You can download the detailed report here (registration required).

IT serves to systematize and streamline the business process which in turn drives down the cost of operation. As IT matures, the article points there is a major shift in CIOs’ openness to new IT operating models. What’s most striking about the alternative models is where they’re driving IT teams to think differently about their role and the value they provide. Well it’s an overused cliché but “paradigm shift” is the only way to describe the changes happening in the software industry and how they’re helping IT organizations let go of the tactical issues of technology according to the article.

IT Strategy Consulting Challenges

Raj Sheelvant — Tue, 29 Sep 2009 01:18:23 +0000

David Clark is a former Managing Partner for Gartner UK Consulting. Prior to that, he has been in senior positions at a few of the other “tier one” consulting firms and a couple of enjoyable stints as a CIO positions in industry. His career spans about 25 years during which time he has delivered around fifteen or so IT strategies and had four “done to him”. It’s always a good idea to hear from someone in the trenches about challenges of IT Strategy Consulting rather than reading Business School Case Studies. My brief chat with David validated that. I learnt a lot from my conversations with David and hope you do too!

Raj: Any common theme you found in your IT Strategy Consulting?

Dave: What I’ve found again and again and again is how much a strategy and the IT function all too often mirrors the personality of the CIO and when moving into implementation it can end up costing way more than it needs to if the CIO has ambition beyond their pockets. Every consulting firm, regardless of what any of them say approaches strategy in a fairly similar way – and most of them can arrive at a fairly obvious and sensible outcome. Some can do it in a few weeks and some spin it out for eternity. My point about the CIO’s personality is that I’ve noticed over the years that more often than not the strategy eventually twists and turn into something that they then rationalize to fit their own original thoughts. Unless of course it’s Accenture delivering it then he or she will probably be lucky to remain the CIO.

Raj: So you reckon that managing the CIO’s ego is also part of a consulting job?

Dave: Without question, although I’m not sure it’s managing it or simply recognizing it! I think the thing that I have found, more than anything else over the last twenty five years, is that everything boils down to people. It might on the surface look like a technology issue or perhaps a process problem but seriously – when you dig down – 9 times out of 10 it’s a people problem. It boils down to a mixture of ego, ability, personality, capabilities, behaviors which then manifest themselves in all sorts of ways. I can wax lyrical on this one for hours – so I’ll try and stop myself. It’s also what really makes business interesting so I shouldn’t complain!

Raj: What did you find out about CEOs and CMOs involvement during your IT Strategy Consultancy? Are they interested in defining IT Strategy or do they delegate it to CIO?

Dave: Hmmm. I think this is a really interesting question about the other members of the exec. I think that the challenge around aligning the business, and I have to say I hate the term aligning with the business – how often do you hear that Sales is aligning with the business or HR is aligning with the business, sorry off on a tangent there, as I was saying all too often the business itself lacks a true strategy – I’ve often encountered companies who say they have a business strategy and don’t and then IT have to try and align to something that’s ill defined and often bland. I’ll give you an example – we reviewed an IT strategy for a large commercial company – the business strategy was sell more services to more customer in more sectors, which in itself was hardly incisive and their IT Strategy: be more efficient, modularize and optimize. Yea – sure – they don’t need IT Strategy Consultants to tell them that although they had actually had one of the tiers one firms in for quite a good few weeks before we got involved. Perhaps one day there will be a single integrated strategy for the business with IT as a thread within it – some companies are now doing this so hopefully it’ll catch on.

Raj: So the other ‘C’ level executives know what IT can do for their business strategy?

Dave: They think they know, or rather they have some ideas, which today is perfectly reasonable, as so many business have graying boards - i.e. the CEO knows IT is important but he’s 55 years old and in many ways only “gets” a bit of what IT should mean to his company. The COO often views IT as the function to blame when any operational issue occurs, or they can’t deliver in time. The CFO will as ever be asking about costs and where savings can be made, etc etc… this scenario plays out time and in again in so many companies. So the CIO has to mash all of this together and then deliver something interesting, engaging and compelling usually for less money that it really needs and in less time than he would ideally like.

Raj: So, what should CIO do to get the board interested in IT Strategy?

Dave: I think the CIO has to really create a highly visual and compelling story to try and engage his/her board – I’m a big fan of the story teller CIO – so for example in the case I mentioned earlier – we attempted to condense the IT Strategy into a compelling idea and then build the story around this – but in all honesty Raj this is really to try and get the attention of people who I personally think should pay attention in any case! Over the next few years I think it will start to change as a generation hits the board room who have been raised on smart IT. I find it difficult to imagine any of my children for instance needing to have the benefits of collaboration explained to them, or accepting it will takes eight months to introduce a new application….!? As an aside collaboration and corporate are in many cases mutually exclusive, they weren’t built to collaborate – but that’s probably a topic for another day.

Raj: Moving on to a different topic… What do you think of SaaS and Cloud computing?

Dave: I’ve got very strong views on this so here goes…whilst the various consulting firms and technology vendors argue about definitions, security, total cost of ownership, transferability, cost per server, cloud, SaaS, PaaS, on-premise, off-premise what they seem to miss is whether they like it or not small and medium size companies are happily buying services over the internet. For them it’s all down to cash flow, flexibility and scalability and these small and medium sized companies are just as important, if not more so to the economy than the industrial giants.

I often think therefore that the debates themselves tend to re-enforce the IT geek model. However I do accept that for larger companies SaaS and cloud has quite a few more implications, but really it’s just another delivery model that the CIO can factor into his strategy and thinking. So, I’m not sure if you agree, but I think we are sitting at a really interesting point in IT – a sort of tectonic plate shifting time – eventually the whole SaaS/Cloud stuff will make a difference across the industry, regardless of all the debate and I personally think it’s going to cause some interesting shifts in the traditional Consulting/SI firms – which is good for the customer as well. At least I hope so as I took the plunge of leaving Gartner to start a new consulting/SI type firm which is really founded on this new generation services that are starting to appear. Sort of put your money where your mouth is approach!

Raj: So what’s your vision for your new consulting company?

Dave: Oh no the dreaded elevator pitch – here goes then…a business and technology firm formed from collaboration with many active members across the globe linked by great systems and sharing capabilities, knowledge and profits in an equitable and ethical manner. I just don’t believe that it makes sense anymore to have 10,000 people on your books, in a hierarchical model, driving you to make decisions that are so often sub optimal for the client – and I know this is the case because in my time I’ve seen it happen – lots. I described our company recently to a customer as “An efficient 21st century workers co-operative!”

Raj: All the best with your new endeavor. Keep us posted.

Dave: Thanks Raj, likewise with the blog -it’s good fun and it makes me smile and think a bit – which is what it’s all about really.

Web 2.0 Strategy for Traditional Organizations

Raj Sheelvant — Thu, 06 Aug 2009 01:09:59 +0000

Web 2.0 technology has created a new breed of online customer—one who is both a producer and a consumer of their own content and services. How does it impact an organization? McKinsey article titled “Managing beyond Web 2.0” portrays a strategy called LEAD (listen, experiment, apply, develop) to create a road map that will help companies thrive in the online world’s environment of constant change.

Following is the summary of LEAD strategy from the article.

Listen: Organization need have a formal process to monitor and analyze what its customers are saying about it online and then use this information as an early-warning system. Companies should always assume that the digital environment will change rapidly and hence they must adapt accordingly. Rather than pushing messages at consumers, marketers should listen to them and think constantly about ways to engage with them actively.

Experiment: Next engage newly empowered customers by using the novel tools of Web 2.0 and beyond. Start small by creating a company profile on social-networking sites, such as Ning, or create a Facebook account, a daily blog and a tweet. While return-on-investment metrics for social media are still in the early stages, these experiments clearly pay off big time in greater customer awareness and brand engagement.

Apply: Take the experiments and apply them. Make it simple for consumers to link and tag content, and find ways to make site more relevant in social-networking searches. Measuring impact is paramount and therefore its important to use Web’s predictive tools and quantitative analysis to track the results of the experiments.

Develop. The Internet is a social medium and should therefore be a crucial part of any company’s marketing mix. But it is critical to develop integrated marketing programs that use the Web as more than just another advertising channel.

Most of the executives are intimidated by the evolving nature of the Web 2.0 and the implications it has on the marketing and branding strategy. They are inundated by ‘success stories’ by other companies including their competitors. I think McKinsey has done an excellent job of simplifying the complexity of adapting Web 2.0 technology with their LEAD strategy. Although, those of us watching the evolution of internet might think that the LEAD steps are rudimentary, their target audience is non technical executives in traditional organization (consumer durables and discretionary).

What this article does not cover is who should lead these Web 2.0 projects? Should there be a central coordinated effort led by corporate executives or should it be dealt in piecemeal by marketing /sales department. I think it should be a coordinated effort by CIO and CMO jointly owning a long term Web 2.0 strategy. I think ‘D’ in LEAD is critical and if Web 2.0 is implemented done in the absence of a business strategy, it will be of little use in the long run.

Balancing IT Operations with IT Strategy

Raj Sheelvant — Tue, 04 Aug 2009 01:12:16 +0000

The CIO’s role is one of communicating a vision and driving a change management strategy that will result in greater user and organizational acceptance of the projects selected for development. This according to SearchCIO.com article titled “Avoiding IT project failures with a change management strategy” By Kristen Caretta. Organizational change management is crucial especially in this global recession. A change management strategy formally introduces initiatives to everyone affected by them, and should also introduce any new roles or expectations to team members to get everyone on the same page at the same time. The IT department should embark on projects that will positively impact business strategy.

Research from The Standish Group International Inc. on project success rates found that 24% of projects are canceled partway through or delivered and not used. The SearchCIO.com survey showed that just 11% of large organizations complete all projects in their development queue; the majority (54%) report an abandonment rate of 1% to 10%. The final third don’t finish 11% to 50% of projects. The article also notes that change management should be the starting point because the overall [project management] strategy will succeed or fail based on this. Tighter budgets have led many organizations to add checkpoints for proposals, aimed at weeding out unnecessary or unrealistic projects before they even start.

If there is a silver lining in this global recession, I think role of CIO has been elavated. Developing a vision that meets business objectives and the needs of stakeholders is now being expected for the first time from a CIO. CIOs are expected not only to keep operational spend under control but mainly make progress on IT strategies. The article notes that balancing IT operation with IT Strategy is critical not just for managing IT but also for engaging the rest of the business leadership team. That is one of the CIO’s most important responsibilities.

IT can lead U.S. Out Of Recession

Raj Sheelvant — Fri, 31 Jul 2009 00:59:57 +0000

Aneesh Chopra, federal chief technology officer and assistant director for technology at the White House Office of Science and Technology Policy sees a great opportunity for CIOs and the tech industry in general to help lead the country out of the recession and deliver on some of the federal government’s most pressing IT priorities. Chopra is pushing CIOs to think about strategy and innovation above cost containment. Read more at Tech Careers article titled “Federal CTO Sees IT Leading U.S. Out Of Recession”. “Traditional corporate CIO functions have largely been about efficiency,” Chopra is quoted in the article. “It’s a terrific opportunity for the top-line, top-level revenue growth oriented CIOs. Investments in game-changing ideas to improve the quality of products and services is very likely on the CEO’s agenda.”

I think Aneesh Chopra hit the nail on the head. CIO and CTO in an organization are usually involved in cost containment. Hence they usually end up reporting to CFO. But CIOs can and should play a major role in an organization especially helping create, enable and sustain Business Strategy. They need to have an influential seat at the strategy table. With software, internet accelerating disruptive technology, competitive advantage that any organizations have is getting to be less and less ‘sustainable’ (read my blog on Fleeting Competitive Advantage. These cutting edge disruptive technological innovation is less understood by the top management and hence they need a dedicated top executive (in form of CIO) to be on lookout of innovative technology on the horizon. CIO not only has to scan the environment for the adaption rate of new technology but should see how that technology can enable current business strategy.

I will reiterate what Chopra says CIOs need to think about strategy and innovation above cost containment.

Business System and Business Strategy

Raj Sheelvant — Fri, 19 Jun 2009 01:50:04 +0000

McKinsey Quarterly presents Enduring Ideas: Business Systems. This article makes a compelling presentation that by alignment of Business System is the cornerstone in creating a truly integrated business strategy.

So what is a Business System? According to the article “the business system” charts all the steps involved in creating and delivering a company’s product. At each link in the chain, from product development to sales and service, managers have a choice of how to conduct the business. From a strategic point of view, the most important assessment is how the choices made at each step reinforces the company’s overall value proposition and, hence, its competitive advantage. The word system in business system emphasizes the importance of aligning conduct at every step with the value proposition.

The article categorically states that the business strategy involves an integrated set of actions designed to help companies gain sustainable advantage over competitors. The business system is a framework that allows a company to formulate the set of actions most likely to achieve this advantage. In 1985, Harvard’s Michael Porter introduced a similar framework—the value chain—and cited the business system concept in the book Competitive Advantage.

See the interactive presentation here.

From an IT Strategy standpoint, once the business system is mapped and set of actions that achieve competitive advantage is determined, then the CIO needs to see if those steps can be automated so as to improve efficiency. IT department needs to understand the business system so that they can apply their expertise in software automation to widen the competitive advantage. That way, IT or internal software development organization can play a key role in enabling the Business Strategy. Obviously some steps cannot be automated because the ROI of automation is small and human glue can work better with training.

Tags: IT+Strategy, IT+Management, McKinsey, Strategy, Competitive+Advantage