Most of the respondents say that the increase in spending in IT budget is mainly due to credit crunch.  Due to increased regulatory overview, banks will have to spend more on IT to buy/build compliance software.   Also, banks want to incorporate ‘lessons learned’ from unbridled risk they took which led to the current mess they are in.  They are setting up ‘guardrails’ to prevent themselves from committing the same mistakes again.  Software automation will play a comprehensive role in creating those checks and balances within the banks.  Huge profitability in the past allowed the banks to be less efficient.  Banks are also very well known for being slow in adapting to newer technology.  Going forward the banks cannot afford to move at a slower pace.  They need to be laser focused on efficiency, improving profitability and reducing risk.  Implementing cutting edge IT infrastructure and software application will help them become more nimble and agile.
Banks need to evaluate every business process and eliminate all the ‘non value added’ processes.  They also need to be sensitive to their customers need, provide them with new and innovative financial products. All of this needs IT to play a pivotal role in the banking industry and I believe the current banking crisis will lead them to increase IT spending.  The banks that will survive this credit crunch will be lot different from the banks of today.

Tags: IT Spending, Banks

•    No. 1 thing keeping Indian CIOs up at night– finding and retaining talent.
•    Most CIOs are laser-focused on business strategy. In a domestic economy still growing a torrid 8% a year, the tactics of IT infrastructure and application management are left mostly to senior staffers or outsourcers
•    Most of the Indian CIOs report to CEOs.
•    The Indian CIOs take for granted that their businesses operate in a global context, so they apply that mind-set to all dimensions of their job, from sourcing to project development to customer service.

The last point was very interesting… US based CIO still have a legacy mind set of ‘inward’ pointing viewpoint.  Globalization for the US based CIO is still an afterthought.  Indian CIO’s had the luxury of being in the frontline of understanding how globalization has a direct impact on the bottom line.  Thus they look at the business in the global context.

Tags: Globalization, Indian IT Managers, CIO

I think IT executives of large organizations will stay on the sidelines and will decide not to enter the cloud now, during its infancy. The lingering questions about reliability, security and overall performance hang over cloud computing providers. Large companies do not have the risk tolerance to start using cloud computing immediately. Most CIOs and IT Executives in large organizations will wait for the technology to mature before putting even the most non-essential applications on someone else’s servers. But according to the CIO article some large companies that are accepting the risk are allowing isolated teams working on one-off projects to peek into the cloud and catch a glimpse of its value. The article also states that whether they’re tapping the capabilities of software as a service (SaaS), platform as service (PaaS), infrastructure as a service (IaaS) or any of the countless other XaaS alternatives flooding the market, businesses find all manner of benefits from the cloud.  But the question still remains – Is it a game changing technology?  As long as large companies perceive ‘cloud computing’ as risky, it’s not going to be a game changer.

While Large Organizations are slow to adopt SaaS model, SMB (Small and Midsize Businesses) are increasingly using ‘cloud’ computing as the perception of risk has changed according to Information Week article ‘Warily, Small Businesses Look To Cloud Computing’.  Also, most small-business owners lack the time and expertise to develop and maintain a dynamic and attractive Web presence, their risk tolerance is higher.  With ‘cloud’ computing, SMB gets access to the Enterprise Application with minimal upfront investment.   At the same time cloud computing providers get an opportunity to continuously work to perfect this unique delivery model.  This symbiotic relation between SBM and Cloud computing providers will make this emerging technology more pervasive in the near future.  This in turn will reduce risk and will attract the large organizations to ‘cloud computing’ environment.

So, in the long run, most of the companies (large, mid size or small) do not want to have the overhead cost associated with running a large IT department that is solely involved in sustaining existing enterprise application.  The need to upgrade (both hardware and software) as the half life of the technology keeps lowering is going to force the companies to look at cloud computing seriously.  The ability to outsource ‘commoditized’ IT infrastructure and contextual IT applications (like payroll, HR etc.) will enable the companies to focus on their core competency.  More importantly, the IT department within the organization will be able to focus on aligning IT to the business needs.  IT can focus on building applications that will create/sustain companies the core competency.  So, cloud computing makes sense and slowly this delivery model will end up disrupting traditional delivery model.

Tags: cloud computing, PaaS, SaaS, XaaS

The goal of the Web 2.0 technology is to ‘democratize’ the information flow.  In a traditional company the information flow is ‘vertical’ and ‘top-down’.  In that restricted ‘information flow’ environment individuals cannot be empowered.  Web 2.0 on the other hand, enables the information to flow ‘horizontally’ and ‘bottom -up’.  Its great news that a quarter of executives surveyed have a clear understanding of the power of Web 2.0 technology and are changing the organizational structure to leverage its usefulness.  BTW, the only way to upgrade an Enterprise into Enterprise 2.0 is to make organizational and cultural changes to the corporation and thus maximize Web 2.0 benefits.  Simply implementing existing Web 2.0 like blogs, wikis within the firewall (ie within an Enterprise environment) and calling that organization as Enterprise 2.0 is nearsighted and that organization will be left behind in this new collaborative and globalized world.

Tags: Enterprise 2.0, Web 2.0, IT Management, Collaboration, Cocreation, Traditional Organization

I don’t think this is a problem with just the US Government’s IT projects.  I believe similar waste exists with IT projects that are being implemented by the government organizations in other countries.  I also think that the quasi-government organizations (ex: Freddie Mac, etc), International Organizations (ex: WHO, UN etc) and NGO (ex: Red Cross, etc) all have wastes in implementation and management of the IT investments.

It’s a shame that the IT projects that can streamline business processes and improve productivity within the governmental divisions are not being implemented correctly.  IT investment can help make government agencies become more efficient and effective by reducing data duplication and improving automation.  But, as the GAO report finds that the Project Management for these IT projects is handled by ‘unqualified individuals’.  I think hiring a qualified IT Project Manager is the first step in correcting waste in IT investment.  IT managers in this case needs to be an expert not only in understanding the needs of government agency but also in negotiation and influencing skills.  Usually, government organizations are slow moving in decision making process and the bureaucrats are not incentivized to solve the problem fast.  IT Project Manager needs to be savvy to move through the bureaucratic maze and identify the ‘champions’ within the government agency.  Getting the backing of the right person or sub division within that government agency will enable the IT PM to escalate the issues to the right channel when hampered with quagmire and status quo.  I know this is not easy and the IT PM may not succeed every time.  But, trying to implement a project without the support of the customer itself, the IT PM is already on the path to failed implementation of that IT project.

Tags: IT Management, IT Project, IT Project Management

The article also states that ‘The global rollouts of two standardized software applications–a product routing and tracking system, which helps ensure that specific vehicles, down to the paint color, are produced as planned, and an in-plant order management system, which links suppliers into the assembly line–come at the right time. GM is looking at how it can make changes on the production lines at its plants more deftly to react to shifting consumer tastes.’

This is where GM can get to test if its investment in IT is going to pay off. By standardizing the IT infrastructure globally, I think GM will be successful in reducing the IT overhead cost (maintenance, upgrade and support). Enterprise software application for streamlining supply chain and order management will enable GM to be more responsive to the changing customer demand. Obviously, JIT manufacturing is a mind shift and GM needs to change its organizational culture to be like Toyota and incorporate TPS (Toyota Production System). Speed at which GM will radically alter production process will depend on how fast it will change its culture. But a strong IT infrastructure will help GM become competitive again.  

Tags: Enterprise Application, IT Strategy, Business Strategy, GM, TPS, Toyota, JIT

Both these trends are good for IT department and CIOs in the long run. In a hypercompetitive world, speed is becoming the most competitive weapon companies have. Firms are beginning to see the value of aligning IT with business needs. They are beginning to see IT as an enabler of making the firm agile to respond to changing customer needs and rising competition.

IT Project Manager’s goal should be to understand the ‘pain points’ of the company and understand the real business need before implementing the project. IT PM should reduce the scope of the project and release the application with bare minimum functionality to the customer fast. In other words, IT PM needs to deliver the project in an incremental and evolving form instead of a big bang large scale deliverable. That enables the customers to focus on what’s urgent right now. At the same time, project can adapt easily to changing nature of the business. As the article states “Projects and programs in the future must be smaller, faster and easier” so that the organization can extract value from the IT project at a faster rate so that they can be relevant in this fast changing environment.

Tags: IT Project Management, IT Management, CIO

You have to register to get the entire study. But the major takeaways from the study is as follows:

Communities are about Delivering Game-Changing Results

• Communities can increase revenue per customer dramatically, i.e., 50%
• Communities will increase product introduction success ratios
• Communities amplify everything you do- increasing effectiveness and decreasing costs

The Rise of the CMO 2.0?

• Communities should be an important part of the CMO’s toolset (but for many large companies - there is an under-investment and scale problem)
• Companies should evolve the role of the CMO into Chief Community Officer (but that will require drastic changes in attitude and approach to marketing)
• If done properly, communities will transform the way marketing works (reduced costs, improved effectiveness, new opportunities)

The Need for New Management Thinking

• Mismatch between community goals and associated investments
• Major gaps between Community Goals and what is being measured
• Communities have yet to combine with major talent initiatives
• Communities will transform most business processes

The Worst Practices Enjoy Wide Adoption

• The “build it and they will come” fallacy
• The “let’s keep it small so it doesn’t move the needle” phenomenon

And quantitative Results are as follows

• 37% of the communities have been running for 6 months or less
• 27% of the communities have 101-500 members (37% have less than 100)
• 13% of the communities are run by 2-5 full-time managers
• 6% of the companies surveyed are spending more than $1 million annually
• 52% of the companies surveyed plan to increase spending on community

You will find more quantitative results are here(@ SlideShare.net). There is one slide that caught my attention.  I have shown that slide below.

As you can see these community/Web 2.0 initiative is mainly owned by Marketing Department. IT department is distant 4^th in the ranking. Shouldn’t IT be involved in these strategic initiatives? I think Marketing is a great organization to drive the ‘external facing’ community based initiative. But I strongly feel that it should be done in collaboration with IT department. These ‘Greenfield’ projects, are easy to start (they always are). But as the scope and scale of these applications begins to expand, entropy sets in and these applications begin to have high sustaining costs. The usability of that Web 2.0 application also begins to diminish. Also, myriads of these collaboration application initiative started by different organization needs to be consolidated over the period. No organization will take that lead other than IT. So, organizations need to collaborate with IT department in building these collaborative applications.

Tags: Marketing Strategy, IT Strategy, IT Management, Web 2.0, IT Department

Obliviously, Coke is planning on using existing IT technology to collaborate–among employees, with bottlers, with consumers—and considers it as vital to remaking its business to chase fragmented and fast-moving global markets. IT initiatives is going to play a make-or-break role according to Information Week article “Coke Exploits Collaboration Technology To Keep Brand Relevant”

The article talks about Coke’s plan to tackle the collaboration strategy with a three pronged approach.

• For internal collaboration, Coke has implemented what it calls its Common Innovation Framework, a system that combines project management and business intelligence (BI) capabilities to give operating units in 50 countries the ability to search for and reapply concepts used in developing and marketing beverages produced by Coke. Common Innovation Framework provides a global view into the product pipeline, which lets, for example, one business unit mine for product ideas by searching beverage or brand concepts that worked well in other countries. The Innovation Framework also helps Coke recognize duplicate product ideas and helps the company to combine efforts.
• As for working with its extended family of bottlers, Coke is using SAP’s ERP software, delivered via Coke’s IBM hosted data centers to standardize business platform and streamline its supply chain. Improved communication and collaboration between Coke and its bottlers will enable Coke to smooth peaks and valleys in its demand forecasting. The rising costs of raw materials only make that close collaboration more important.
• Coke’s trying to cozy up to the kids through its www.mycokerewards.com Web site, which has 40 offshoot sites worldwide geared toward specific interests. The result is a social network built around Coke’s loyalty program that pulls people in by tapping their tastes in sports, music, and entertainment.

Coco-Cola’s investment in the collaboration IT software will help it in achieving two aspects of it’s marketing strategy.

Market Dominance Strategy: With the first and third approach, Coke will be able to continue its Market Dominance Strategy. These approaches will enable and strengthen Coke’s as a leader in non-alcoholic product. By keeping track on its effort to bring out new innovative product, Coke can streamline innovation and keep its competitors at bay. Collaboration with the customers will also enable it to exploit creative skills of its ‘prosumers’ who are willing to provide ideas for its product innovation. It can deepen the relation with it ever growing global consumers and enable Coke to continue to strengthen its brand.

Defensive Strategy: With the second approach mentioned above Coke will be able to create a good defensive strategy. Streamlining Supply Chain should allow Coke to continue to invest and strengthen its wide global distribution network thus increasing its market penetration. That should enable Coke to protect it turf before any potential competitive threats.

One thing to watch for is that Coke’s product proliferation (introducing multiple SKUs to target every fragmentation in market segment share) may undercut the ‘Coco-Cola’ brand’s halo effect. Collaboration technology or Enterprise Application may not be able to solve that problem.

Tags: IT Strategy, Strategy, Business Strategy, Globalization, Marketing Strategy, ERP, Enterprise Application, Business Intelligence, Coco Cola

This is what he thinks about today’s customers’ need: “The customer today wants a trusted innovator and they are standardizing their business processes on proven platforms — platforms that are well integrated and global. Any customer, whether small, mid-size or large, is thinking beyond their geographic boundaries, beyond their current markets. They have to innovate. They have to grow. So, the market is in favor of big, proven brands and it is not going to be nearly as friendly to small, riskier plays.”

About the push towards Business Intelligence, his comments are “There is a major gap between strategy and execution. If you talk to most CEOs today — and I do all the time — they have great strategies. You can look right behind their desk, on the credenza — three-ring-bound strategy documents galore, and they are great. The issue that they all have, though, is: How do you execute that strategy? So, the real art form is taking strategy to execution and then renewing that loop on a continuous basis. Business intelligence actually allows you to do that — how do you get the data, the information and the knowledge in the hands of the executive to make well-informed, real-time decisions.”

His views on Google “Google has done a great job of providing information to the casual user and the information worker and clearly the cloud computing concept is something that is here to stay. And therefore, Google has created great search, great cloud computing and, I think, it has forced everybody to think more productively about that user experience and how you can get that information into the users’ hands in highly productive, low-cost ways. So, credit to Google”

About the future of Enterprise 2.0: “… small companies that are innovating today to provide Facebook-like services to big corporations, and more and more they are trying to extract from the enterprise market pull to their sites because they think they can help businesses with things like advertising, affinity networking and marketing, etc. So that, too, is a trend that is here to stay”

Tags: Future of Enterprise Application, IT Strategy, Enterprise 2.0, SAP, Bill McDermott