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A Survival Guide For CIOs

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  • 1. A Survival Guide for CIOs Dale Kutnick Senior Vice President Gartner Executive Programs
  • 2. Business expectations for IT focus on current operations and performance * Item not included this year © 2009 Gartner, Inc. All Rights Reserved.
  • 3. Decrypting the CEO and Business 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? © 2009 Gartner, Inc. All Rights Reserved.
  • 4. Unlike the Last Recession, IT Is Not the Problem — But When Priorities Are This Serious, IT Cannot Be Immune Cutting operating costs 68% Increasing revenues 53% Preserving cash 45% Sourcing fresh capital 25% Liquidating assets 9% 0% 20% 40% 60% 80% 100% Source: Gartner business executive survey 2009 (unpublished) n=150 © 2009 Gartner, Inc. All Rights Reserved.
  • 5. Indeed, in Business Leaders’ Eyes, IT Is One of the Solutions — So Count Yourself Lucky — And Proceed With Grace Product enhancement 48% Information Technology 48% Sales 47% Risk Management 39% Research & Development 35% Marketing 33% People & culture development 33% Partnerships, alliances and value networks 29% For each of the following Intellectual property 24% business areas within Legal and Compliance 24% your organization, indicate Property and facilities 23% whether investments in Capital equipment 23% 2009 will increase Staff (hiring) 22% compared with 2008. Business Services 16% None of the above 15% 0% 20% 40% 60% 80% 100% Source: Gartner business executive survey 2009 (unpublished) n=150 © 2009 Gartner, Inc. All Rights Reserved.
  • 6. Business Leader Views of IT Capability Improvement Priorities Our technology platforms (software, 61% telecoms, hardware) Our internal IT department resources 61% Business department users ability to 46% exploit IT systems Our external IT services providers 32% 0% 20% 40% 60% 80% 100% Source: Gartner business executive survey 2009 (unpublished) n=150 © 2009 Gartner, Inc. All Rights Reserved.
  • 7. Perhaps This Is One Reason Why 60% of business leaders think their current enterprise IT capability CONSTRAINS their choices Source: Gartner business executive survey 2009 (unpublished) n=150 © 2009 Gartner, Inc. All Rights Reserved.
  • 8. A Technology-Enabled Enterprise Framework Cor p . Vi Execution Excellence ew Pervasive Integration IT services “Services” are delivered as integrated IT measurably Innovation expected, across enables a & based on entities or new/renewed Transformation established tangential process metrics business processes © 2009 Gartner, Inc. All Rights Reserved.
  • 9. 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 leaders Execution excellence is the platform for CIOs to gain trust via tangible, renewable, and measurable delivery of service quality © 2009 Gartner, Inc. All Rights Reserved.
  • 10. CEO Issue No. 1: Restructuring Organizational restructuring (such as layoffs) Financial restructuring (such as deleveraging) Corporate restructuring (such as entity consolidation) Industry restructuring (such as players failing) © 2009 Gartner, Inc. All Rights Reserved.
  • 11. Many IT organizations are organized around IT assets. CIO Business Requirements Doc Functional Specification Detailed Design IT Area IT Area IT Area IT Area 1 2 3 4 Implementation Line Test Integration Test User Acceptance Test © 2009 Gartner, Inc. All Rights Reserved. 11
  • 12. Services Delivery Based IT Organization CIO Business Facing Domains Application Management Professional Services © 2009 Gartner, Inc. All Rights Reserved.
  • 13. CEO Issue No. 2: Can't Write-off Fast Enough Must dump.. Assets we don't need Debts we won't recover Old assumptions & plans Investors who won't play Staff we can't pay Managers who can't. . . Partners we don't need © 2009 Gartner, Inc. All Rights Reserved.
  • 14. Write-Off: IT Agenda Impact To support high / peaky PR-related activity CIOs should Many and varied BI special requests expect … 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 the restructuring dominoes fall slowly © 2009 Gartner, Inc. All Rights Reserved.
  • 15. CEO Issue No. 3: Loss of Business Trust Seeds of Radical Change It seems anybody could go bust any minute Systemic opacity exposed The trust of decades trashed in hours Human 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 "An economic Pearl Harbor" also believe there is a – Warren Buffet, September 2008 role for government. Raw capitalism is a dead "The world financial system is becoming multipolar" - Peer Steinbrueck, September 2008 end. I've seen it" US Treasury Secretary Henry Paulson in Fortune - 6 Oct. 2008 "The first casualty of economic downturn is the truth" – Luke Johnson, Chairman Channel 4, FT October 2008 © 2009 Gartner, Inc. All Rights Reserved.
  • 16. 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 … © 2009 Gartner, Inc. All Rights Reserved.
  • 17. Business/IT Relationship Effect on Role Efficiency Effectiveness Investment • Collaboration High Business 5% Perception • of Respect Dependency on • Information Cost Trust 25% Low 70% Low High Business Perception of Credibility of IT © 2009 Gartner, Inc. All Rights Reserved.
  • 18. Business/IT Relationship Effect on Role Efficiency Effectiveness Investment Acting as the High business Business Perception of Dependency Acting like on a business Cost Information Supporting Low the Business Low High Business Perception of Credibility of IT © 2009 Gartner, Inc. All Rights Reserved.
  • 19. CEO Issue No. 4: Globalization Instability Two-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. © 2009 Gartner, Inc. All Rights Reserved.
  • 20. IT Agenda Item: Emerging Market Globalization Requires a New Enterprise Topology From Industrial Networks To Frictionless Networks Linking 20th-century Balancing 21st-century industrial control centers activity volumes • Your enterprise architects must have a network-centric mind-set. • The cloud presents new opportunities for global speed and elasticity. © 2009 Gartner, Inc. All Rights Reserved.
  • 21. 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. © 2009 Gartner, Inc. All Rights Reserved.
  • 22. CEO Issue #6: Many CEOs Will be Interested in Serious Enterprise Innovation DHL DHL Has a dedicated innovation center. It is developing an RFID “smart sensor” tracking service for high- value, cold supply chain items. www.dhl-innovation.de/en/ CIO Tim Stanley was first to market deploying “surface computing” in Harrahs Harrahs a casino bar in 2008. The table-like multitouch display offers games, cocktail “mixology” and dating. www.microsoft.com/surface One way CIO Filippo Passerini Procter & is helping meet CEO A.G. Gamble Lafley's imperative to improve collaboration between countries: 300 “telepresence” HD video- conferencing suites. www.cisco.com/telepresence © 2009 Gartner, Inc. All Rights Reserved.
  • 23. Innovation at Transport for London Figure 1. Transport for London sites at the center of an Figure 2. Transport for London uses information, process, and information based value network that influences customer behavior to benefit the more than 10 million commuters moving transport decisions that benefit the individual traveler as well as through London each working day. all travelers moving through London. © 2009 Gartner, Inc. All Rights Reserved.
  • 24. Techtonics: 2009-12+ Pervasive connectivity Permanent Disruption … Information utility ubiquity Ergonomic interfaces Info storage & mgmt Communications standards convergence Social networks Cloud computing Techtonics enable rapid technology, business, and societal innovation © 2009 Gartner, Inc. All Rights Reserved.
  • 25. How Does the CEO Measure IT-Infused Innovation? Does “automation” enable processes to be combined, The Process eliminated, or permutated to (mix of CEO Eliminate ? the following): - Cut costs? - Cut time to market (for goods, services)? ? Combine - Introduce products faster? - - Read the market more accurately? Enable BPO, where business-justified? Mix ? - 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 © 2009 Gartner, Inc. All Rights Reserved.
  • 26. 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 © 2009 Gartner, Inc. All Rights Reserved.
  • 27. Getting to IT-Infused Process Innovation! Deeply understand business evolution/enabling processes Dist. Establish strategic design office; partner with business execs (internal/external) to “juggle” processes IT Sales Manage IT budgets and “active agent” personnel to execute on strategic business priorities Mktg. Manage skill profiles like staffing agency and move skills with Cust. changing roles: Create evolving routines across the business Svc. Build reciprocal measurement into all service relationships Develop and exploit information assets HR Fin. IT-infused process innovation changes what work gets done by whom, improving effectiveness, efficiency, and increased accuracy © 2009 Gartner, Inc. All Rights Reserved.
  • 28. 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) © 2009 Gartner, Inc. All Rights Reserved. 28
  • 29. IT Imperatives: 2009/10 Improve efficiency (e.g., IT costs/revenues) and flexibility Enable appropriate outsourcing approaches in the The Solution context of a business-relevant portfolio management plan CEO 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 services Successful ITOs will drive execution, pervasive integration, and transformation © 2009 Gartner, Inc. All Rights Reserved.
  • 30. 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 © 2009 Gartner, Inc. All Rights Reserved.