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CMO/Marketing Strategy • International Marketing • Market Research
Which issues are top of mind, or should be top of mind, for CIOs? Consider this list, gleaned from discussions with scores of U.S. and Indian CIOs, as well as from InformationWeek research.
On a trip to India late last month, I had the privilege of speaking at our company’s Interop event in Mumbai. My presentation’s theme: Top 10 Business Technology Priorities: The Perspective Of U.S. CIOs. While it’s a bit presumptuous of me to speak for U.S. CIOs, I have met with and interviewed scores of them during the past year, and I have at my disposal rigorous surveys of U.S. business technology executives to back up my qualitative impressions of what’s on their minds.
So using that information, I not only presented my top 10 list to a CIO audience at Interop Mumbai, but I also sat down with half a dozen local CIOs. Here I present, in inverse order, that non-definitive top 10 list of U.S. CIO priorities–and how they measure up against the priorities of Indian CIOs.
No. 10: Improve Collaboration
What do Ford, Procter & Gamble, and Cisco have in common? Their CIOs all cite improving collaboration among their companies’ far-flung employees and supply chain partners as one of their top priorities. The overarching goal: increase productivity and tease out innovation.
The technology has arrived: the rise of Microsoft SharePoint and other robust collaboration platforms; the maturation of high-quality telepresence as well as desktop videoconferencing systems; the emergence of unified communications; and the widespread adoption of Web 2.0 tools such as Chatter, Yammer, Socialtext, and WebEx.
The big question: Once companies have established these platforms and tools, will their people use them? In a survey of 53 client companies released earlier this year, the Corporate Executive Board found that user adoption of Web collaboration technologies–wikis, social networking, predictive markets, and the like–lags initial deployment by five to eight quarters. InformationWeek and Gartner research is similarly skeptical. Collaboration isn’t like CRM or ERP, whose use can be dictated and enforced from on high. Collaboration is more personal–people must intuitively see the value of these tools and must be engaged in their selection and build-out, or they simply won’t use them.
No. 9: Explore Cloud Computing
Note that I didn’t say “embrace” the cloud. Companies still have a lot of exploring to do, and obstacles like security and compliance to overcome, before they’ll make major investments in software, infrastructure, and platform as a service. But don’t dismiss cloud computing as just hype.
For starters, software as a service–the true multitenant, subscription variety–is gaining traction in the U.S. Close to 80% of respondents to a recent InformationWeek survey say their companies are using some form of SaaS, up from 61% just two years ago, with CRM and email leading the charge. The top benefits: ease and speed of implementation and upgrades; the ability to scale up and down quickly; and the ability to eschew some supporting capital investments.
Use of infrastructure as a service is less widespread but also on the rise–59% of our survey respondents are using some form of IaaS, up from 37% two years ago. One pioneer is Eli Lilly, which is buying large chunks of Amazon server capacity on demand to support compute-intensive drug research, then scaling down when that capacity’s no longer needed. But rather than migrate whole hog to public cloud services, most U.S. companies are looking to build hybrid clouds, capitalizing on the flexibility of cloud architectures while keeping their most sensitive or critical workloads behind their own firewalls.
The CIOs I talked with in Mumbai took issue with the fact that cloud is so far down on my top 10 list. Most of them see it as priority No. 1, 2, or 3, possibly because they have less sunken investment in legacy IT systems and are more receptive to turning to third-party providers.
Global steel, energy, shipping, and telecom conglomerate Essar, for instance, has virtualized most of its servers and is an early user of Microsoft’s Azure, trying out some noncritical applications on the platform as a service. “We think cloud is going to be inevitable,” says CN Ram, Essar’s CIO, adding that security is among his biggest concerns. Sandeep Phanasgaonkar, CTO of Indian financial services company Reliance Capital, sees front-end apps moving to the cloud first but back-end apps remaining on-premises for some time. Most companies, he adds, are dipping their toes into private clouds, but he sees the real benefits accruing to those that can take advantage of the economies of scale of public cloud services.
No. 8: Get Your Arms Around The Consumerization Of IT
It should be a familiar refrain by now: Consumer technology innovation is outpacing business tech innovation, and many employees are using their personal devices and applications for work because they don’t like their company-issued technology.
CIOs need to step up rather than get their backs up: Set clear policies that govern which specific devices and apps will and won’t be supported; establish how the data on those personal devices and apps will be managed and secured by the company; and formulate a plan for how employees will be reimbursed or subsidized for sanctioned personal tools, if at all. The theory, at least, is that employees who use the devices and apps they’re most comfortable with are more productive employees. CIOs need to embrace personal technology, not treat it as a pestilence.
Consumerization is top of mind for Indian CIOs, too. A Wipro senior VP, Anand Sankaran, delivered a keynote address on the subject at Interop Mumbai, and several of the CIOs I met and talked with said they’re starting to come to terms with this issue, even if tablets aren’t nearly as widespread in India as they are in the U.S.
No. 7: Leverage Social Media
Your customers, partners, and suppliers are talking about your company, its processes, and its products on some form of social media, whether that’s Twitter, Facebook, Foursquare, YouTube, or more specialized forums and portals. Companies need to monitor and participate in those conversations, especially with customers. Semantic analysis tools, in particular, can help companies mine that social dialog to shape new product development and upgrades, improve customer service, and refine sales and marketing initiatives.
At the very least, establish a social presence and see what you learn. For example, after introducing a motor bike aimed at girls and young women, TVS Motor, India’s third-largest maker of two- and three-wheelers, created a Facebook fan page around the new brand and learned that its female buyers wanted a choice of about 100 colors rather than the standard four or five–so TVS updated its product offering accordingly, says CIO T.G. Dhandapani.
Back in the U.S., the Facebook site of girls’ clothing retailer Wet Seal has become one of the biggest drivers of its in-store and website traffic, thanks to coupons and other promotions, and its “shop with friends” functionality turns shoppers into buyers at 2.5 times the company’s average online conversion rate.
Even though Gartner has listed “social computing” among its top 10 CIO priorities, it isn’t so sure companies will succeed with it. Through 2012, the advisory firm predicts, more than 70% of IT-dominated social media initiatives will fail as IT organizations “struggle with shifting from providing a platform to delivering a solution.”
No. 6: Find The Right People
Ask 10 technology vendor CEOs about their No. 1 priority, and they’ll all give you the same answer: finding smart, skilled, talented people, even amid high unemployment. Just look at the battle for talent among industry players Google, Microsoft, Apple, Cisco, Facebook, and Zynga. In India, for instance, Facebook reportedly offered a 21-year-old computer science and engineering major a total compensation package valued at about $145,000, including signing bonus and relocation to the U.S.
Tech skills are hardly in such high demand at the IT shops of most U.S.-based companies. InformationWeek’s 2011 IT Salary Survey, the most extensive in the industry, found the median total compensation raise for IT staffers to be just 0.9% this year, 1.9% for managers, indicating a tight job market. Compare those stats with the tech boom of 2001, when the median raise was 8.5% for IT staffers and 9.9% for managers. (Such annual raises are commonplace in India, where annual turnover among IT pros can run 20% or higher at tech companies.)
Still, certain tech skills are in very high demand in the U.S, according to our salary survey. Among managers: enterprise content management, data integration and data warehousing, business intelligence and data analytics, ERP, application development, and application integration. Among staffers, add security and Web infrastructure skills to that mix.
No. 5: Prep For The Post-PC Era
The PC turned 30 this year, and it’s already looking ready for the retirement home. When Steve Jobs, the late Apple chairman, called this “the post-PC era” during the company’s iPad introductions, he wasn’t just tooting Apple’s horn–Goldman Sachs estimates that tablets are displacing as many as one in three Windows PC sales. At a recent meeting InformationWeek hosted with top CIOs, they all agreed we’re witnessing the slow demise of the PC. Even IBMer Mark Dean, one of the co-developers of the original personal computer, thinks the PC is “going the way of the vacuum tube, typewriter, vinyl records, CRT, and incandescent light bulbs.”
We’re seeing a proliferation of complementary, sometimes replacement business computing devices, most of them around the uber-trend of mobility: yes, tens of millions of tablets, led by the iPad, but also myriad iOS, Android, and BlackBerry smartphones loaded with enterprise applications. We’re also seeing a proliferation of specialized computing devices in retail, warehousing, transportation, and other industries. We’re hearing about general-purpose thin client devices from the likes of Samsung and Acer running Google’s Chrome operating system. And we’re seeing momentum around desktop virtualization.
Umesh Jain, CIO of YES Bank, the fourth-largest private sector bank in India, says he’s close to picking a “desktop as a service” provider to give employees server-based access to gold-, silver-, or bronze-level Windows applications and services, either on company-issued dumb terminals or on their sandboxed personal devices. A BPO company or companies would provide the service to YES on a subscription basis, Jain says. Among the benefits: lower client hardware, security, and power costs.
No. 4: Harness Big Data
The term “big data” is relative. Fifteen years ago, the largest data warehouses in the U.S. were measured in single-digit terabytes, and only a handful of companies–the likes of Wal-Mart, AT&T, and MasterCard, as well as data specialists such as Acxiom–breathed that rarefied air. Today, the largest corporate data stores top many petabytes–but so what, if you’re not analyzing that data to make more informed decisions.
Last year, when InformationWeek drilled down into what is driving companies’ interest in “advanced analytics,” including predictive, they ordered their priorities this way: optimize business processes (pricing, efficiency, etc.); identify business risk (fraud, customer churn, defaults, etc.); and anticipate new opportunities (cross selling, opening new markets, etc.). For example, Procter & Gamble executives worldwide regularly plug into conference rooms equipped with big-screen dashboards to discuss the latest market and product data–and take corrective actions according to those areas flagged as red or yellow. In a separate program, using a series of analytic models, P&G is predicting market share and other performance stats six to 12 months out.
All the Indian CIOs I spoke with mentioned big data as among their top priorities.
No. 3: Break Out Of The 80/20 Spending Trap
My former colleague Bob Evans used to beat this issue hard, and it’s no time to let up. With IT budgets relatively flat at most companies, and with competitors fighting for every scrap of business, CIOs can no longer afford to spend 70% to 80% of their precious funds supporting and maintaining existing systems. They must shift, permanently, a big chunk of their budgets into growth initiatives–IT projects and programs that open new markets and drive new business rather than just maintain the status quo. Even the most innovative IT users in the U.S., as represented by our annual InformationWeek 500 ranking, spend 63% of their IT budgets on ongoing operations as opposed to new initiatives–a percentage that has barely budged in a decade.
This isn’t a theoretical exercise. Shifting from 80/20 or 70/30 spending to 60/40 or 50/50 won’t happen if CIOs don’t step forward with a detailed plan to make it happen. When he was CIO of Hewlett-Packard, Randy Mott got its IT pros spending just 30% of their time on maintenance, down from 70%, as part of a three-year master plan under which HP consolidated data centers, applications, and data marts and modernized its infrastructure. Mott’s plan forced the company’s IT pros to document every hour they spent on new versus legacy work, and it forced the company’s LOB and IT execs to agree on the revenue and other benefits to be derived from each and every IT project.
No. 2: Make IT One With The Business
Each year for more than a decade, the Society for Information Management has surveyed its CIO members, and their No. 1 concern is always the same: Improve IT and business “alignment.” As one Indian CIO asked after my presentation in Mumbai last month: If this issue is so important to U.S. CIOs, just align already!
InformationWeek agrees that CIOs and their teams need to get on with it. In fact, we’re not all that comfortable talking about “the business” and “IT” as if they’re separate functions. You don’t see CFOs or CMOs yearning to align with “the business,” so why is this still such a sticking point for some CIOs? IT is the business at market leaders such as FedEx, Procter & Gamble, Wal-Mart, and University of Pittsburgh Medical Center–and it has been for many years.
We’re encouraged by the fact that, according to our InformationWeek 500 research, CIOs are taking on formal responsibilities outside their IT organizations, in areas such as business process management, innovation, procurement, business services, and supply chain management. They’re also getting more directly involved in new product development: 45% of InformationWeek 500 companies cited “introducing new IT-led products and services” among the top three ways they plan to innovate with technology this year, up from 37% in our 2009 survey.
Robert Urwiler, CIO of Vail Resorts, hires people who think like product developers and not just technologists, as the $1 billion company looks to develop “customer experience” applications, like its smartphone app that lets skiers and snowboarders brag about their mountain feats on their Facebook pages. Urwiler’s two biggest partners at Vail: the CEO and CMO.
At Hero MotoCorp, India’s largest maker of motorbikes, CIO Vijay Sethi reports to the CEO–as do the CIOs of most Indian companies whom I spoke with–and is part of a leadership team that also includes the CFO and heads of HR, operations, production, and supply chain. One interesting twist at Hero: Its technology users–not the IT organization–send status reports on IT projects, Sethi says.
No. 1: IT Is Too Darn Slow (And Needs To Get Faster)
InformationWeek thinks this issue is so important that we wrote a magazine cover story on it in February and made it the theme of our InformationWeek 500 Conference and issue in September. As editor Chris Murphy has articulated, this “need for speed” comes to a head when your sales and marketing and product development and HR groups say they can be ready to go with a new initiative in two months–and the IT organization says it will need six to nine months.
When IT becomes the bottleneck for new products, capabilities, and expansion, the company’s ability to innovate and outmaneuver increasingly nimble competitors is in jeopardy–and the CIO’s job is on the line. When we asked business technology execs in a recent survey to cite their biggest concerns, their No. 1 choice was “can’t implement fast enough to meet business goals.” American Express CIO Toby Redshaw looks at the challenge in a positive light, stating in a recent presentation to the company’s board: “Small agile beats big slow–big agile beats everything.”
The rapid-fire pace of consumer IT innovation has raised the technology expectations of companies’ employees and customers–they demand to get new features and functionality at that same pace. At the same time, cloud computing, agile development, and other advances make accelerated business technology execution all the more possible. Take the FBI and its long-delayed Sentinel case management system, now on track after CIO Chad Fulgham introduced an agile, iterative software development methodology. “Fail fast and fail cheap” is Fulgham’s credo. Better yet, innovate like your life depends on it.
This article was originally published on InformationWeek.com on 10/20/11.
Rob Preston is VP and Editor in Chief of Information Week. Rob oversees the editorial direction of the world’s leading business technology media brand. Rob works with an award-winning team of more than 40 writers and editors to deliver a unique point of view on information technology news and trends, helping 2 million Web site visitors, magazine readers, and conference attendees frame and define their business technology objectives.VN:R_U [1.9.7_1111]Top 10 CIO Priorities,
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