Next generation CIOs: Change agents for the global virtual workplace

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Next-generation CIOs: change agents for the global virtual workplace is a Cognizant Business Consulting research report, written in cooperation with the Economist Intelligence Unit. The Economist Intelligence Unit conducted the survey and analysis and wrote the report.
The report was based on a survey of senior executives in North America and Western
Europe, in-depth interviews with nine senior executives and experts in the industry and other research. The author was Jim Nash and the editors were Katherine Dorr Abreu and Debra D’Agostino.
The Economist Intelligence Unit would like to thank all those who contributed their time and insight to this project.

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Next generation CIOs: Change agents for the global virtual workplace

  1. 1. Next-Generation CIOs: Change Agents for the Global Virtual Workplace| COGNIZANT BUSINESS CONSULTING Month Year ARTICLE TITLE 3
  2. 2. PrefaceBe Global Next-generation CIOs: change agents for the global virtual workplace is a Cognizant Business Consulting research report, written in cooperation with the Economist Intelligence Unit. The Economist Intelligence Unit conducted the survey and analysis and wrote the report. The report was based on a survey of senior executives in North America and Western Europe, in-depth interviews with nine senior executives and experts in the industry and other research. The author was Jim Nash and the editors were Katherine Dorr Abreu and Debra D’Agostino. The Economist Intelligence Unit would like to thank all those who contributed their time and insight to this project. Contents 1 Executive Summary 5 Introduction 7 Reorganizing Work: A New Hierarchy 10 A New Leadership Role for CIOs 11 Cultural Changes can Empower Teams, Ensure Security 13 The Elusive ROI 15 Conclusion 16 Appendix: Survey Results 2 COGNIZANT October 2010
  3. 3. Executive SummaryFor several years, chief information officers (CIOs) havechampioned business efficiency. Their focus has been largelyon operational goals, such as keeping IT and operationsrunning smoothly and reducing related costs, while enablingbusiness processes to support their companies’ strategies forgrowth and profitability. But the convergence of globalization,technologies that enable virtual work, collaborative methodsand techniques, and a new tech-savvy generation(Millennials) of employees is changing how … collaborative virtual teams,business is conducted and structured acrossthe organization (within teams, departments, when used effectively, combineetc.) and how the corporation interacts with diverse skills to quickly carrycustomers and partners. out complex tasks and addressThis report examines the role of CIOs in novel market challenges.restructuring how work is conducted throughoutthe organization. It finds that companies leading the movementtoward virtual and collaborative teams — often spurred bythe CIO — are garnering results, particularly with respect toinnovation, talent recruitment and retention, and productivity.Key findings include:● Some companies are changing their operations to support new structures based on virtual teams that do not rely on traditional hierarchies and communication channels. These teams can be powerful operational resources, particularly when it comes to knowledge-based work. Unlike more traditional structures, these specialty teams reach across geographic, cultural and organizational barriers to find the needed resources. While not appropriate for all types of operations, collaborative virtual teams, when used effectively, combine diverse skills to quickly carry out complex tasks and address novel market challenges. They also have the potential to foster more productive relationships with internal and external partners. October 2010 NEXT-GENERATION CIOs 3
  4. 4. ● Organizations that have embraced virtual teams garner benefits such as increased innovation and competitiveness, but lack appropriate valuation methods to measure the quantitative impact of these structures on the bottom line. Still, it is possible to quantify such things as delays resulting from redundant decision reviews prevalent in more conventional work structures. It is also possible to measure time lost when clients or suppliers spot problems that would have been avoidable had these stakeholders been involved earlier in the project through virtual collaborative teams. To gain support for their companies’ transition to the new approach, executives need to develop ways to measure return on investment. ● CIOs are in a unique position to influence the adoption and effectiveness of virtual teams. CIOs are familiar with the people, tools, technologies and techniques needed to create a corporate culture of virtual teams. Particularly within knowledge-based enterprises, they know the processes and policies employed at all levels of the company and the tools that can support them. And as members of the C-suite, CIOs are familiar with long-term strategic goals, which is essential in crafting an enduring new structure. This perspective positions them as change agents.4 COGNIZANT October 2010
  5. 5. IntroductionA confluence of forces, some old, some new, is pushing companies to change howthey work. Globalization, powered by new communications tools, has broadenedtheir reach. Technologies such as cloud computing are allowing organizations torestructure operations. At the same time, a new generation of technically savvyworkers is working its way up the ranks, further exposing companies to transformativetechnologies like social media. For some firms, particularly those that operate inmany locations, new ways of organizing work that take advantage of knowledgesharing can be an effective response to these business shifts.CIOs who combine technological expertise with a broad, strategic view of the businesshave an opportunity to lead their organizations’ adoption of new work approaches.They bring technological clout to what is fundamentally a culturaltransformation of the company. They can do so because they areintimately involved in corporate strategy, which gives them a rare CIOs who combine technologicaltop-to-bottom perspective. expertise with a broad, strategic viewCollaborative and virtual teams — more complex, dynamic and of the business have an opportunity toautonomous than traditional corporate team structures — can makeit possible for companies to take advantage of human, physical and lead their organization’s adoption oftechnological resources regardless of where they are located. new work approaches.A global survey of executives in Europe and North America,conducted by the Economist Intelligence Unit in May 2010 in cooperation withCognizant Business Consulting, suggests that companies that are at the forefrontof the transition stand out from their peers in many respects. Companies that arealready seeing the benefits of this transformation, defined as “leaders” in this report,say they outperform other organizations in innovation, recruitment and retentionof talent, and productivity. They tend to be less hierarchical, provide more flexiblework arrangements, and have established policies and practices that support the Collaborative Virtual Work Structures: A New Way to do Business Collaborative teamwork is certainly not a new thing in the relevant – communication is shared. Executives who have played business world, but how teams are used and how they function midwife to this change say it boosts productivity, reduces errors is changing. In this report, the term incorporates a number of and helps retain high-quality talent at all levels. characteristics. Interviewees often use the term “virtual teams” When successfully deployed, these teams combine the strengths in describing them, although they involve more than mere of small start-ups and of large, mature organizations: nimble, physical dispersion. entrepreneurially minded teams are sheltered in the midst of In this new organization, teams break down rigid structures, big, stable companies. They can spot and respond to market creating environments in which people work in role-based, developments more rapidly than can conventional large cross-departmental, cross-functional and international groups. organizations, and they are able to throw more resources at Knowledge sharing is fundamental to how these teams operate, opportunities and errors than small outfits can. and their success hinges on effectively using the expertise of each These teams have elements of social networking. Both involve member. Teams are by their nature flexible and open to change. self-organization and groups that are focused on shared interests, While there will always be standard operating procedures, and and both depend on frictionless, informal communications. the need to show results will always be preeminent, teams must Custom-made analogues of Facebook, Wikipedia and Twitter, as have a degree of self-management to be successful. well as high-definition, high-bandwidth telepresence systems, This autonomy means organizations can put more energy into which allow people in different locations to feel as if they are in innovation and less into bureaucracy. As a result, less – but more the same room, weave teams together. October 2010 NEXT-GENERATION CIOs 5
  6. 6. formation of more virtual and collaborative teams. Throughout the report these Leaders are more likely to haveChart 1 leaders are compared with companies that expect to garner benefits from new workflat structures structures either within a year or more, or not at all. Those firms are classified as “allHow would you describe your organization’s structure andoperations? For each pair, choose the one most applicable. others” in the charts throughout the report.Leaders are those that are already reporting ROI from The research also shows, however, that there is no single model for such teams, norcollaborative virtual teams. a single best path to implement them. How they are deployed reflects a company’s(% respondents) Leaders tolerance for decentralization, shared decision-making, collaborative innovation and All others change itself. Some firms create teams at strategic points, straddling marketing andHas a hierarchical organizational structure production or research and development and legal, for example. Others integrate 51 them deeply into the organization’s fabric. 71 While one might think that the digital generation – the Millennials – would be theHas a flat organizational structure main driver for this sort of change in companies, the research shows that they are 49 not playing that role. This may reflect the current economic environment, in which labor is abundant. What matters more than age is mindset: Companies are adopting 29 a variety of tools and collaborative methods because they increase competitiveness,Source: Economist Intelligence Unit survey, May 2010. not necessarily to attract or retain a specific employee demographic. Nevertheless, organizations that are at the forefront of this transition may be better positioned to attract new workers when economic growth tightens labor markets. To implement collaborative virtual teams, organizations must overcome several hurdles, including resistance to change and the risks born of greater openness. Executives must be sure that the teams are well coordinated and do not work at cross- purposes. And although companies that have embraced these teams say they are integral to their organizations’ operations, they do not have quantifiable measures of their impact. Developing a set of metrics to prove the value of collaborative virtual teams is among the main challenges to their widespread adoption. Executives who are able to quantify results will gain credibility to lead their companies’ transformation. About the Survey A total of 402 respondents in Europe (52% of respondents) Chart 2 Survey respondents represent global and North America (48%) participated in the survey, which organizations was conducted by the Economist Intelligence Unit in May 2010. How would you describe your organization’s structure and The panel is mainly senior: 45% of respondents hold C-suite operations? For each pair, choose the one most applicable. or equivalent positions, and another 29% are senior vice- (% respondents) presidents, vice-presidents or directors. Operates globally 72 Respondents represent a wide range of company size. Thirty- Operates only in its home country eight percent are from small to medium-sized companies, 28 with less than $500 million in annual revenues. Another 19% represent companies with $500 million to $5 billion in revenues Partners with companies in several countries per year, and the remaining 33% come from companies with 81 revenues of more than $5 billion. Partners only with companies in the country in which it is headquartered Forty-six percent of respondents have IT functions. The survey 19 sought to explore differences in perspectives between these Sells on the global market and non-IT functions, but found considerable alignment 75 between the two groups. Strategy and business development, Sells only in the market in which it is headquartered and general management were the other main functional 25 categories, with 13% in each. The remaining 28% fulfill a range of functions. Has a global supply chain 72 Most of the organizations surveyed have global operations. Has a domestic supply chain Respondents’ descriptions of their organizations appear in 28 chart 2. Source: Economist Intelligence Unit survey, May 2010.6 COGNIZANT October 2010
  7. 7. Reorganizing Work: A NewHierarchySurvey results show that new ways of organizing work are gaining traction. Aboutone in six respondents says their organization already has seen positive resultsfrom more virtual and collaborative teams, and another one-fifth expects to garnerbenefits within a year. Executives interviewed for this report are strong advocatesof these work structures. Leslie Jones, CIO of communications giant Motorola, forexample, says collaborative virtual teams are part of the company’s DNA.The practices are particularly appropriate for knowledge-based work. Some Leaders value innovation, talent Chart 3companies have implemented them enterprise-wide, sometimes as a result of a major and productivity more highly, and saystrategic decision. In many cases, however, they are applied in an opportunistic way, their organizations outperform theirand gain ground gradually within companies. Other organizations are not adopting peersthese work structures. How important are the following attributes to your organization, and how does it compare with its peers?Those already benefiting from such practices — our “leaders” group in the survey — Rate on a scale from 1 to 5 where 1=extremely important orhave some attributes in common not shared by the remaining respondents. The significantly outperform; 3=average; 5=not at all importantformer are more likely to see innovation and collaboration as important competencies or significantly underperform.for their organization. They say their company is at the forefront in testing new Leaders are those that are already reporting ROI from collaborative virtual teams.collaboration and remote-work technologies. And they report that the benefits of greater collaboration — including increased Leaders… the research innovation, improved productivity and greater All others competitiveness — outweigh the risks, such as % respondents who said the attribute wassuggests that reduced governance and potential security lapses. “extremely important”collaborative (See chart 3 on this page and chart 5 on page 9.) Innovation 68virtual teams are Companies in which top executives demonstrate 45 23 strong support for the transition to a new workmore likely to take structure are more likely to outperform their peers Recruitment of high-quality talent 68hold where the in such areas as innovation and productivity, the 38 30 survey shows. The CIO in particular is seen as aCIO is engaged in potentially galvanizing force: The research suggests Retention of high-quality talent 59the process and that collaborative virtual teams are more likely to 41 18 take hold where the CIO is engaged in the processinvolved in broader and involved in broader strategic concerns. Productivitystrategic concerns. Perhaps because they have been deeply engaged 56 45 11 in the transformation of their organizations,interviewees report positive results after adopting the new structure. Indeed, forU.S.-based consumer products giant Procter & Gamble (P&G), which considers % respondents who say their organizationsvirtual teams a strategic strength, the structure minimizes delays between discovery, “significantly outperform” their peersdecision and action. CIO and president of global business services Filippo Passerini Innovationsays building such teams is more than a way to delegate tasks: It pushes decision- 35making authority from middle managers toward groups of project or topic experts 19 16working together, eliminating bureaucratic delays. Recruitment of high-quality talentEarly adopters of these work structures tend to have flatter organizations and less 23“siloed” communication channels than more traditional companies, the survey 11 12shows. They typically offer a wider range of collaboration and remote-access tools, Retention of high-quality talentincluding telepresence, instant messaging, site templates, external or custom social 19networking environments and cloud computing. (See chart 4.) 11 8These characteristics support virtual teams, says Chris Satchell, chief technology Productivityofficer (CTO) at U.S.-based International Game Technology (IGT), a global developer 22of electronic gambling systems. (In an unusual setup, the CIO of IGT reports to 14 8Mr. Satchell, who thus combines responsibility for technology innovation and IT.) Source: Economist Intelligence Unit survey, May 2010. October 2010 NEXT-GENERATION CIOs 7
  8. 8. Because communications generally are not filtered or relayed through managers,Chart 4Most companies provide support information can spread more easily. Ideas can be added to, dismissed or simplyfor virtual teams, but leaders offer more, absorbed by the group for future use. There are few data-hoarders, and isolatedand more advanced, choices “gurus” are integrated in teams where they share their specialized knowledge.In what ways does your organization support a virtual workenvironment? Select all that apply. Such a team might comprise a factory manager, data engineer, marketer, projectLeaders are those that are already reporting ROI from manager and company attorney, all of whom have expertise in the project at hand.collaborative virtual teams. Most or all of them can be in separate locations. Working together, they address(% respondents) Leaders practical issues, eliminate redundancies and catch mistakes more efficiently All others than within conventional structures. When they span the globe, these teams canCloud computing effectively work on a project around the clock. 46 18 In some cases, the benefits might not be initially obvious. Collaboration is intrinsicExternal social networking access to the hospitality industry, for example, but it tends to be site-specific. Jeremy Ward, 44 17 CIO of global luxury hotelier Kempinski AG, says that the company instituted aPresence awareness (Online indication that person is culture of geographically diverse virtual teams two years ago. “We changed the wayavailable to communicate) we work,” he says. 55 30 The Munich-based company, which develops and manages hotels, often in exoticInternal/custom networking applications corners of the globe, learned that employees benefit from a robust, shared cache 54 of experiences and greater autonomy. Operating a hotel in Mongolia is different 32 from running one in Namibia, but there are similarities in providing luxury in remoteProviding remote access to e-mail 91 locations, including sourcing materials or training staff in a developing economy. 73 Once the advantages of knowledge sharing were identified, and the case for a newProviding employees with mobile equipment corporate culture made, the company implemented tools needed to make it possible.(mobile phones, laptops, etc.) Kempinski’s global virtual teams now use wikis to collect, share and elicit knowledge 91 75 about tasks, practices and projects. Virtual shared workspaces enable real-time,Instant messaging capabilities globally dispersed collaboration. And process-automation tools streamline corporate 65 tasks including training and personnel matters like vacation requests. 49Video conferencing Interviews with other executives reveal that Kempinski’s culture-before-technology 71 approach is a common best practice among companies that have adopted 56 collaborative virtual teams. Making the transition to this work structure posesProviding remote access to corporate network and servers challenges for traditionally organized companies, however. The CIO can provide the 84 support needed to implement the necessary changes. 70Corporate portal or intranet 75 61Source: Economist Intelligence Unit survey, May 2010.8 COGNIZANT October 2010
  9. 9. How to Deploy Collaborative Virtual Teams “If a global perspective isn’t everywhere in the company, you’re A united C-suite showed everyone the benefits of virtual holding yourself back,” says Chris Satchell, chief technology teams. Among them are: officer of U.S.-based International Game Technology (IGT). ● Faster time to market: Everyone needed for a project is For IGT, which has $2.1 billion in annual sales and facilities involved from the beginning, which minimizes time spent on every continent but Antarctica, that perspective involves on briefings at critical decision points. more than knowing overseas sales projections. IGT is turning to global virtual teams in an effort to remain ● Less bureaucratic interference: Teams are semi- the world’s biggest maker of casino-based and online autonomous. gambling systems. Mr. Satchell was hired in June 2009 by ● More innovation: If done right, virtual teams concentrate new CEO Patti Hart to help end the company’s financial needed expertise in each group. stagnation. Ms. Hart had already begun efforts to dismantle what Mr. Satchell says was an outmoded command-and- Relationships are important when building virtual teams. control structure. “We’re always pushing employees to understand that people in other groups have different perspectives. They have While IGT is still the dominant player in the market, the something you need, and you have something they can use,” global recession has cut its revenue and profit, and slashed says Mr. Satchell. its share price. Seeing an opening, competitors are hungry to overtake the 25-year-old firm. As head of product and Even as virtual teams become more entrenched at IGT, information technology, it is Mr. Satchell’s job to make sure travel remains an important relationship-building tool. “It’s IGT is not out-innovated. To that end, he is deploying virtual a misconception to think that you can do away with your teams throughout the organization. travel budget,” Mr. Satchell says. Even high-frequency virtual meetings need to be supported with occasional face-to-face Before repeating the practice in the whole company, Mr. gatherings (though not necessarily involving whole teams). Satchell debuted the concept in IT. “I wanted to make sure I had my own house in order.” He started with some small- Today, Mr. Satchell says, “we’re getting the pace and focus scale efforts and made sure IT could support the larger move that we need.” He thinks he is two years away from completing without a hitch that could derail company-wide deployment. IGT’s transition to mature virtual teams.Chart 5 All organizations face the same challenges, but leaders aremore confident in their abilitiesWhat are the greatest challenges posed by a more virtual work environment? Select all that apply.Leaders are those that are already reporting ROI from collaborative virtual teams.(% respondents) Leaders All othersDifficulty in managing diverse tools needed to enable dispersed teams to work together effectively 26 41Risks to governance and control 42 54Data leakage 44 55Erosion of corporate culture 23 30Decreased efficiency 6 13Loss of productivity 4 25Source: Economist Intelligence Unit survey, May 2010. October 2010 NEXT-GENERATION CIOs 9
  10. 10. A New Leadership Role for CIOs In just a few years, most CIOs and their IT departments have grown from asset managers to strategic enablers, ensuring that IT capabilities are aligned with business needs. The next step for CIOs is to become drivers of broad strategic change. If they do not, they risk losing clout in their organization. “How much competitive advantage can there be to running a different network layout or buying a different server?” asks P&G’s Mr. Passerini. Motorola’s Ms. Jones agrees. Gone are the days when CIOs could prove their strategic value by assembling technology platforms that support business processes. “The minute the CIO talks about ‘alignment’ (of IT with business processes), you’ve declared yourself as something alien” to the revenue-generating portion of the organization, she says. “We have to be integral to the strategy, not just aligned.” Leaders test and adopt technologiesChart 6 It is not enough, even, to support a top-down initiative that uses collaborativethat enable virtual teams virtual team tools, because the tools are not the critical component. WhatWhich statement best describes your organization’s approach to matters, says Ms. Jones, is the organization’s ability to perform well inadopting technologies that enable collaboration and remote work?Leaders are those that are already reporting ROI from collaborative complex markets through a flexible and adaptive structure that is supportedvirtual teams. by IT. CIOs interviewed for this report agree that such an approach is crucial.(% respondents) Leaders To make it work, tools, processes and policies that support collaborative All others virtual teams have to be spread throughout the organization.Is at the forefront in testing and adopting new technologies 52 Can CIOs sell such an idea to the company? They have in the past: At the start 15 of the PC revolution, finance staff began taking their personal computers toOnly adopts technologies after their effectiveness the office so they could do their job without having to petition for time on thehas been proved in the market 44 mainframe. Successful CIOs understood what was happening, advocated for 60 policy changes and adapted systems to capitalize on decentralization.Only supports basic technologies such as email and conferencing This new change is much bigger in scope, and will require that CIOs tacklecapabilities 3 cultural issues that have strategic impact. Survey results suggest they 23 have the support to do so: The CIO is broadly viewed by respondents asDon’t know/Not applicable a champion for collaborative environments, and also is considered the1 appropriate executive to implement the structures and tools needed 3Source: Economist Intelligence Unit survey, May 2010. to make collaborative virtual teams happen. Only CEOs ranked higher overall (chosen by 47% of all respondents), which is not surprising as they are ultimately responsible for determining corporate strategy. What isChart 7CIO and CEO should lead implementation unexpected, though, is how high CIOs ranked: They were chosen by 45%of virtual teaming of all respondents. (Respondents could choose up to two of nine functionsIn your opinion, who within the organization should lead the effort or groups.) CIOs ranked even higher among companies defined as leadersto implement the structures and tools necessary for a more virtualwork environment? Select up to two. in the survey: For those firms, the CIO outstripped the CEO 49% to 45%.Leaders are those that are already reporting ROI from collaborative (See chart 7.)virtual teams. CIOs looking for an ally when promoting virtual teams should turn to(% respondents) Leaders All others chief marketing officers (CMOs), suggests Clay Shirky, who teaches theAn ad-hoc committee involving CIO, COO, others Interactive Telecommunications program at New York University and 16 has written extensively about communications trends. Traditionally the 23 most outward-focused executive, the CMO has much to gain from greaterChief operations officer (COO) collaboration with buyers and would-be buyers, and can be a powerful ally in 22 24 creating collaborative virtual teams. It is axiomatic that the best marketingChief executive officer (CEO) campaigns are conversations. 45 Leading such a change could create greater opportunities for CIOs in 48 the long term, suggests P&G’s Mr. Passerini: “The CIO role is beautifullyChief information officer (CIO) or equivalent 49 undefined. This is a unique opportunity to play a more active role in the 44 business.” Tackling cultural change is one way to expand the CIO’s presenceSource: Economist Intelligence Unit survey, May 2010. in the organization.10 COGNIZANT October 2010
  11. 11. Cultural Changes can EmpowerTeams, Ensure SecurityCollaborative virtual teams can alter how work is done. They create benefits, butalso risks and challenges. They require organizations to evolve, reshaping teamsand developing processes to meet the needs of the task at hand. And they requireexecutives to coordinate the teams so that the overall goals of the organization aremet.Security — keeping data and innovations safe – is an important concern. Surveyrespondents who say their firms are already garnering benefits from using thesenew work structures rank security second only to cultural resistance as an obstacleto creating a more virtual environment in their organizations.Technology in the form of ever evolving applications is not sufficient to address theissue of security. Companies that deploy collaborative virtual teams must train andcontinuously communicate with employees the personal stake eachhas in keeping information safe. CIOs interviewed for this report Companies that deploy collaborativeagree that changing behavior is more important than software. virtual teams must train andAs part of its virtual team strategy, Florence, Italy-based GE Oil& Gas, a unit of U.S.-based General Electric, has created policies continuously communicate withthat prohibit employees from releasing proprietary information or employees the personal stake each hasspeaking on the company’s behalf without authorization, says CIOAlan Kocsi. So long as they stick to the policies, GE Oil & Gas’ 13,000 in keeping information safe.employees, spread over 100 countries, can use social networksincluding Facebook and YouTube for personal networking. The company has “virtualco-location environments” with similar functionality for business-related networkingbetween employees as well as with customers and suppliers.Tom Conophy, executive vice president and CIO of UK-based Intercontinental HotelsGroup, also emphasizes training. He is building a culture of awareness aroundintellectual property within the company, and educating employees is part of theprocess. Sending an email or posting on a social network exposes the company tothe risk of data leakage, for example. Employees must be conscious that sending Cultural resistance tops list of obstacles for all, but second-tierChart 8concerns are very differentWhat are the biggest obstacles to creating a more virtual work environment in yourorganization? Select up to three.Leaders are those that are already reporting ROI from collaborative virtual teams. Rank Leaders All othersCultural resistance to changing traditional work methods 1 1Concern that data security would have to be weakened in order 2 4to make collaboration possiblePerception that it will lead to a loss of intellectual property 3 11Cost of implementing collaboration technologies 4 2Existing rules and tools that are designed to prevent data 5 6leakageLack of interest at the executive level 9 5Lack of an effective strategy to support a virtual work 10 3environmentSource: Economist Intelligence Unit survey, May 2010. October 2010 NEXT-GENERATION CIOs 11
  12. 12. Collaborative Virtual Teams Evolve at CERN Some of the world’s largest collaborative virtual teams work published or openly discussed, and individual institutions can at CERN, the European Organization for Nuclear Research, have their own disclosure protocols. Yet despite the number straddling the French-Swiss border. The research groups, of people, the complexity of the tasks and the informal nature involving thousands of scientists and students from dozens of scientific relationships, Mr. Meinhard says virtual teams of countries, use a massive particle accelerator to look for the keep confusion to a minimum. components of dark matter. Unlike many endeavors in which scientific knowledge is Two years ago, talk about success with the kind of collaboration compartmentalized, CERN scientists network extensively that typifies such teams was “hype,” says Dr. Helge Meinhard, and manage their own virtual teams locally. This reduces who leads the CERN information technology (IT) staff that the burden of information overload, says Mr. Meinhard. For supports, among others, an overall team comprised of more the most part, people get only email relevant to them. Team than 2,000 physicists, including 500 students, from 150 wikis are common and collaboration software is available for institutions in 30 countries. This collaboration, known as the groups. Atlas Experiment, is itself a collection of virtual teams. Atlas Facebook is also used as a collaboration platform, though is closely linked with other similarly large collaborations, and unofficially. Some CERN teams recently have started using the communication and knowledge sharing between them are social network to communicate and organize. That indicates intense. a greater level of collaboration is needed, Mr. Meinhard says, CERN has strict rules about what information can be and CERN is looking at how it can provide a similar service information to a neighboring cubicle could just as easily result in sending it to the rest of the world. “You are publishing when you hit the ‘enter’ key,” says Mr. Conophy. A cultural change throughout an organization requires new attitudes. It means winning over those who think collaboration is less a business process than strictly a human resources concern. It entails showing that accountability and productivity can be maintained. And it involves convincing people to share information rather than hoard it. For collaborative virtual teams to be successful, “there has to be a mind-switch throughout the company,” says Mr. Ward. As a result, Kempinski’s training program focuses as much on the benefits of the new culture as on the responsibilities and tools.12 COGNIZANT October 2010
  13. 13. The Elusive ROITransforming an organization’s culture is important, but return on investment (ROI)is ultimately critical. Proving that collaborative virtual teams bring tangible benefitsis still an elusive task. Even respondents who say their organization has alreadyexperienced a measurable return on investment (ROI) from such efforts do notexplain how that return is quantified. And while CIOs interviewed for this report saythese teams have had a significant impact on their companies, measurable ROI ishard to come by.The interviewees posed a common rhetorical question when discussing ROI: Howdoes one put a figure on a mistake that was caught by a team member who wouldnot have been involved in the process under a traditional structure?Chart 9 Leaders are already seeing resultsWhen will changes brought on by greater collaboration and a more virtual work environment result in ameasurable return on investment?Leaders are those that are already reporting ROI from collaborative virtual teams.(% respondents) 17 18 In 1 year 38 In 2 to 3 years 11 In more than 3 years 2 Never 12 Don’t knowSource: Economist Intelligence Unit survey, May 2010.More tangibly, collaborative virtual teams can better distribute workloads amongsubject-matter experts and maximize knowledge sharing. IGT’s Mr. Satchell says hiscompany would never have the capacity to meet current challenges without virtualteaming. Responding to declining revenues resulting from the economic crisisand competitors avid to grab market share, IGT faces soberingchallenges. (See a description of IGT’s challenges in “How to Deploy How does one put a figure on a mistakeCollaborative Virtual Teams” on page 9.) that was caught by a team member whoMr. Satchell does not merely delegate tasks to his teams. Rather,teams are expected to solve complicated problems through critical would not have been involved in thethinking and analysis of sometimes complex conditions or needs. process under a traditional structure?Teams have the authority to make project-related decisions, whileupper management looks after overall strategy. The trust is there, Mr. Satchell says,because team members are experts in the task assigned to them and understandtheir group’s role. What matters is their expertise.According to Steve Brewer, applications development director at FONA International,a U.S.-based global maker of flavors used in foods, medicines and other applications,such teams have made his company “more responsive than our rivals.” Mr. Brewerattributes this responsiveness in part to virtual teams, although similar to hiscolleagues, he is reluctant to assign all of the success to it. October 2010 NEXT-GENERATION CIOs 13
  14. 14. Holiday Inn’s Image Improves as Teams Overhaul Brand Intercontinental Hotel Group (IHG), the world’s largest hotelier be chosen by management. The approach is popular, despite as ranked by number of rooms, has implemented knowledge the various light-hearted nicknames the dedicated space has sharing by bringing team members together in a dedicated gotten: the gulag, the war room, the cave. “I’ve never had room for the duration of the project – whether three months anyone say ‘no’ to a second assignment,” says Mr. Peer. or one year. Tom Conophy, executive vice-president and CIO, Mr. Conophy says the teams complete tasks faster than if they is using these teams to achieve a company goal: making IHG’s had to go through traditional channels to communicate with technology a key brand differentiator. stakeholders and get decisions from executives. He adds that IHG currently manages 1,100 live IT-related projects around the teams generate more innovation because the principle the world. The potential for duplicate work is enormous, so parties are always together to share and assess ideas. key projects use Yammer, a private social networking tool for The approach was used as part of IHG’s yearlong, $1 billion teams. Like many companies deploying collaborative virtual brand overhaul of Holiday Inn, spotlighted by Brandweek.com’s teams, IHG also supports wikis to document projects and weekly Buzz Report, which measures brand awareness among share information. consumers. The January 2010 report concluded that Holiday The teams combine IT employees with anyone else in the Inn’s overall consumer-perception score rose throughout 2009, company who can help complete the project. “Business people despite an extremely challenging economic environment. It sit next to engineers and have real-time interaction,” says Bill was only one of two top-10 hotel chains to manage that feat; Peer, vice president of enterprise architecture and strategy at the overall industry’s score declined over the same period. IHG. Teams have the authority they need to make decisions A solid strategy for revamping the brand resulted in this that will bring the project in on time and on budget. success. But teams helped the company achieve its goals, People can volunteer their services for a team or they can according to Mr. Conophy. Ms. Jones of Motorola and Mr. Satchell of IGT say their CEOs were predisposed toward more collaborative corporate environments, but that is far from universal. Conventional hierarchies are familiar to and protective of chief executives. To embrace collaborative virtual teams means addressing attitudes about more open knowledge sharing and cooperation. If implemented with the proper coordination to ensure that company goals are met, collaborative virtual teams can provide significant benefits, helping organizations anticipate or respond to novel situations, and thus become more competitive. Still, gaining support to deploy such teams more broadly throughout the organization will require proving their value. Productivity gains, number of innovations, talent retention and a host of other metrics can be useful tools to evaluate unorthodox techniques in rapidly changing environments. However challenging it is to develop metrics to show the benefits of such team structures, CIOs who do so will be better able to sell and then defend the new ways of organizing work.14 COGNIZANT October 2010
  15. 15. ConclusionFor most companies, dealing with uncertainty and change is a part of doing business.Today, however, the challenge is harsher. Globalization has moved beyond the searchfor resources and markets to securing and optimizing the use of talent and skillsets wherever they are found. It depends on collaboration, which now occurs acrossdepartments, using communication tools to connect people regardless of theirlocation. Rapid technological change puts pressure on companies to constantlyadapt. Organizations that are able to knit their operations into flexible and semi-autonomous teams that outperform competitors in innovation and responsivenessto market changes will have an advantage. This will require changes to processes,especially with regard to knowledge-based work.CIOs are strategically positioned for this task because they operate at the intersectionof strategic decision-making and tactical practicality. They see how employees work,and are aware of new technologies that can help employees excel at their jobs. Andthey can take that knowledge to the C-suite, making the case for a structure basedon collaborative virtual teams and supported by tools that will penetrate deeply intothe business world.Companies that have not implemented such changes can learn from the experienceof those identified as leaders in this report. While the use of collaborative virtualteams is still evolving, some best practices have emerged:● The change toward virtual collaborative teams should not be viewed simply as a technology effort but as a strategic business initiative. Many of the companies identified as leaders in this research have relied upon partnerships with business heads to champion this approach. For others, the transformation can start within IT, where CIOs can hone a strategy customized for the overall organization. But this should be a launch pad that will enable the CIO to identify the best techniques and tools for the enterprise.● To be effective change agents, CIOs must be not only leaders, but also enablers and partners. Success is far more likely if CIOs and IT professionals are seen as integral team players whose efforts add real value to the deployment of collaborative team structures within the organization. CIOs can provide the visible corporate leadership and support that is required as traditional hierarchies are challenged and dismantled. They should promote training and robust communication policies that keep enterprise-wide goals and security in sight, yet do not stifle collaboration and creativity.● CIOs should spearhead the development of metrics that prove the tangible value of collaborative virtual teams. While survey respondents report improvements, especially with regard to innovation and productivity, proving value is key to securing enterprise-wide support for a shift to this new approach. Metrics strengthen the CIO’s position as an agent of change. October 2010 NEXT-GENERATION CIOs 15
  16. 16. Appendix: Survey Results Percentages may not add to 100% due to rounding or the ability of respondents to choose multiple responses. How would you describe your organization’s structure and operations? For each pair, choose the one most applicable. (% respondents). 72 Operates globally 28 Operates only in its home country 81 Partners with companies in several countries Partners only with companies in the country in 19 which it is headquartered 75 Sells on the global market 25 Sells only in the market in which it is headquartered 72 Has a global supply chain 28 Has a domestic supply chain 50 Has a limited portfolio of products/services 50 Has a highly diversified product/services portfolio 68 Has a hierarchical organizational structure 32 Has a flat organizational structure16 COGNIZANT October 2010
  17. 17. AppendixHow important are the following attributes to your organization?Rate on a scale from 1 to 5 where 1=extremely important; 3=average; 5=not at all important.(% respondents). 1 Extremely 2 3 Average 4 5 Not at all important importantInnovation 49 31 14 5Recruitment of high-quality talent 43 36 16 4Retention of high-quality talent 44 31 19 5 1Productivity 47 36 13 4In your opinion, how well does your organization compare with its peerswith respect to the following attributes?Rate on a scale of 1 to 5 where 1=much stronger; 3=about the same; 5=much weaker. (% respondents). 1. Much 2 3. About the 4 5. Much stronger same weakerInnovation 22 35 32 92Recruitment of high-quality talent 13 26 43 14 3Retention of high-quality talent 12 28 41 15 4Productivity 15 34 42 8 2In your opinion, how well does your organization compare with its peerswith respect to the following attributes?Rate on a scale of 1 to 5 where 1=much stronger; 3=about the same; 5=much weaker. (% respondents). Agree Neither agree Disagree nor disagreeMy organization is moving toward a virtual work environment, in which human, physical and technologicalresources are located where they contribute most effectively to attaining business objectives. 54 27 19My organization needs to change business processes to work more effectively with external stakeholders. 56 35 10In the next 12 months my organization will take steps to improve collaboration among dispersed teams. 61 29 11Our CIO (or head of IT) is an evangelist for a more collaborative environment within the company and with partners. 43 40 17My organization needs to adopt a more flexible work environment to attract talented employees. 50 33 17My organization has policies and practices that facilitate the formation of cross-functional and dispersed teams. 45 36 19In the next three years, the physical dispersion of our workforce will make it essential to improveour capabilities for working virtually. 53 37 10Collaboration’s positive effect on productivity and competitiveness are outweighed by the risks it entails. 44 36 19 October 2010 NEXT-GENERATION CIOs 17
  18. 18. Appendix Which of the following statements do you think best describe changes that will occur in your organization over the next three years? Select up to three. (% respondents). Cross-functional teams will become more important within the organization. 45 My organization will use more collaboration technologies. 41 My organization will structure its operations based on the most efficient use of skill sets and resources, independent of geography. 35 My organization will outsource more functions. 26 My organization’s teams will be increasingly dispersed geographically. 25 My organization’s employees will increasingly work remotely. 22 My organization’s external partners will be increasingly dispersed geographically. 21 Younger workers entering the organization will exert pressure for a more collaborative and flexible work environment. 20 My organization will offer more flexible work arrangements (such as telecommuting, flexible hours, etc.). 18 Other 1 The organization will remain essentially the same as it is today. 5 Don’t know/Not applicable 1 What is your organization’s strategy with regard to creating a virtual work environment? Choose the option that best applies. (% respondents). Has been an early adopter 28 Is beginning to implement a broad initiative 18 Is beginning a limited trial 20 Is analyzing the need and opportunity 16 Has halted or abandoned efforts 2 Has neither a strategy nor plans to create one 13 Don’t know/Not applicable 318 COGNIZANT October 2010
  19. 19. AppendixIn what ways does your organization support a virtual work environment?Select all that apply. (% respondents).Providing employees with mobile equipment (mobile phones, laptops, etc.) 78Providing remote access to e-mail 76Providing remote access to corporate network and servers 72Corporate portal or intranet 63Video conferencing 59Instant messaging capabilities 52Internal/custom networking applications 35Presence awareness (Online indication that person is available to communicate) 34Cloud computing 23External social networking access 22Other 3My company is not supporting a virtual work environment 5Don’t know1Which statement best describes your organization’s strategy with regard to collaboration?Select only one. (% respondents).It is a core competency of my organization. 18It is an enterprise-wide effort, driven by top leadership. 28It occurs within departments, and depends on the initiative of department heads. 23It occurs only when necessary. 15It is focused mainly on working with external stakeholders (e.g., suppliers or partners). 3It does not have a specific strategy with regard to collaboration. 9Don’t know/Not applicable 2 October 2010 NEXT-GENERATION CIOs 19
  20. 20. Appendix In your opinion, what are the three most important benefits your organization can gain from a more collaborative and virtual work environment? Select up to three. (% respondents). Better productivity 51 Increased efficiency 50 Environment more conducive to innovation and new ideas 31 Faster response to market events 28 Lower infrastructure costs through methods such as virtualization and cloud computing 24 Stronger customer relationships 18 Increased transparency 14 Attraction of a more diverse work force 13 Lower personnel costs by off-shoring 11 Minimizing employee turnover 10 Improved risk awareness and management 10 Recruitment of younger employees 7 Better brand awareness among customers 5 Other 2 Don’t know/Not applicable 1 Which statement best describes your organization’s approach to adopting technologies that enable collaboration and remote work? Select only one. (% respondents). Is at the forefront in testing and adopting new technologies such as data sharing applications and social media. 21 Only adopts technologies after their effectiveness has been proved in the market. 57 Only supports basic technologies such as email and conferencing capabilities. 20 Don’t know/Not applicable 320 COGNIZANT October 2010
  21. 21. AppendixWhat are the biggest obstacles to creating a more virtual work environmentin your organization?Select up to three. (% respondents).Cultural resistance to changing traditional work methods 45Concern that data security would have to be weakened in order to make collaboration possible 26Cost of implementing collaboration technologies 25Lack of an effective strategy to support a virtual work environment 24Lack of interest at the executive level 18Existing rules and tools that are designed to prevent data leakage 16A rigid hierarchical structure with walls between departments 14Belief that it will require more bureaucracy, monitoring and policing 12Our infrastructure is not sufficiently robust to support collaboration 12Lack of interest at the department level 11Perception that it will lead to a loss of intellectual property 11Excessive competition among our departments 6Other 5Don’t know/Not applicable 7To what extent do Millennial employees—those aged 18 through 35—influence yourorganization’s culture?(% respondents).Very large influence 13Some influence 61No influence 23Don’t know/Not applicable 3 October 2010 NEXT-GENERATION CIOs 21
  22. 22. Appendix In comparison to more established workers, what areas do you think are most important for Millennial employees? Select up to two. (% respondents). Opportunities for faster professional growth 41 Flexible work environment 34 Being heard in the organization’s decision making process 23 Adoption of new communications techniques such as social media 19 Mentoring 16 A more non-traditional, decentralized operating structure 14 Opportunities for relocation 7 Focus on corporate social responsibility 5 Other 0 Don’t know/Not applicable 1 How much influence does the CIO (or head of IT) have in defining your organization’s strategy? Please rate on a scale from 1 to 5, where 1= strong influence and 5=no influence. (% respondents). 1 Strong 2 3 4 5 No Don’t know influence influence Enterprise strategy globally 21 26 22 15 13 4 Enterprise strategy regionally 19 27 28 13 10 4 Line-of-business strategy 14 26 27 16 13 3 IT strategy 53 28 9 5 2222 COGNIZANT October 2010
  23. 23. AppendixIn your opinion, who within the organization should lead the effort to implementthe structures and tools necessary for a more virtual work environment?Select up to two. (% respondents).Chief executive officer (CEO). This is an organization-wide challenge. 47Chief information officer (CIO) or equivalent. This is primarily a technology-enabled task. 45Chief operations officer (COO). This is primarily an operations task. 23Chief security officer (CSO). This is a security matter. 5Specially created C-level position. Collaboration involves almost all departments andhierarchical levels, so a specific position exists in my organization to implement it. 6An ad-hoc committee involving CIO, COO, department heads and/or others. 21Department/unit heads. They know best how to accomplish the changes. 11An outside consultant. This helps overcome internal politics and resistance. 4Other 1Don’t know/Not applicable 1How supportive is your IT team of allowing employees to work virtually?(% respondents). 45 Very supportive 47 Somewhat supportive 5 Not at all supportive 4 Don’t know/Not applicableWhat is the relationship between IT and line-of-business executives in yourorganization when it comes to changing technology?Select the one that best applies. (% respondents). IT works closely with line-of-business executives to identify needs and choose 41 appropriate technologies IT consults with line-of-business executives to 30 identify needs but determines which tools to implement Changes in technology are imposed on the 14 lines of business by IT Decisions regarding IT are made by the line-of-business executives and implemented 12 by IT 4 Don’t know/Not applicable October 2010 NEXT-GENERATION CIOs 23
  24. 24. Appendix What do Millennials (employees aged 18 through 35) entering your organization request from IT? Select up to three. (% respondents). Support for mobile computing 38 Unfettered access to the Internet 35 Less bureaucracy in product development and in communicating ideas 26 Collaboration and networking apps 26 Access to new social media and collaboration tools 25 Easier access to internal data 25 Telecommuting support 25 Freedom to choose platform 15 Video capabilities that enable face-to-face communication between people in dispersed locations 11 Other 1 Don’t know/Not applicable 11 Which statement best describes how the role of your organization’s IT function would be affected by a more virtual work environment? Select only one. (% respondents). IT would have a larger policing role in balancing data security and collaboration/transparency. 33 IT would be more closely integrated into departments. It would become a partner in decisions at all levels. 22 IT would have greater strategic responsibilities, including managing the social dimension of information. 20 No change. IT already supports a virtual work environment. 18 Other 1 Don’t know/Not Applicable 6 When will changes brought on by greater collaboration and a more virtual work environment result in a measurable return on investment? Select only one. (% respondents). My organization is already garnering measurable results 17 1 year 18 2 to 3 years 38 More than 3 years 11 Never 2 Don’t know/Not applicable 1224 COGNIZANT October 2010
  25. 25. AppendixWhat are the greatest challenges posed by a more virtual work environment?Select all that apply. (% respondents).Data leakage 53Risks to governance and control 52Difficulty in managing diverse tools needed to enable dispersed teams to work together effectively 38Erosion of corporate culture 29Barriers to communication among dispersed teams 26Loss of productivity 21Decreased efficiency 12Other 2Don’t know/Not applicable 4In which country are you personally located?(% respondents).United States of America 42United Kingdom 12Canada, Germany 6France, Russia, Spain, Switzerland 3Italy, Belgium, Czech Republic 2Poland, Denmark, Sweden, Austria, Finland, Hungary, Netherlands, Norway, Estonia, Ireland, Romania 1In which region are you personally based?(% respondents). 52 Europe 48 North America October 2010 NEXT-GENERATION CIOs 25
  26. 26. Appendix What is your primary industry? (% respondents). Financial services 23 IT and technology 15 Professional services 10 Healthcare, pharmaceuticals and biotechnology 9 Manufacturing 8 Consumer goods 5 Energy and natural resources; Government/Public sector 4 Construction and real estate 3 Entertainment, media and publishing; Telecoms; Transportation, travel and tourism; Education; Retailing; Automotive 2 Agriculture and agribusiness; Chemicals; Logistics and distribution 1 What are your organizations global annual revenues in US dollars? (% respondents). Less than $500 million 38 $500 million — $1 billion 12 $1 billion — $10 billion 17 $5 billion — $10 billion 7 $10 billion or more 2626 COGNIZANT October 2010
  27. 27. AppendixWhich of the following best describes your title?(% respondents).Board member 2CEO/President/Managing director 14CFO/Treasurer/Comptroller 4CIO/Technology director 19Other C-level executive 6SVP/VP/Director 29Head of business unit 3Head of department 7Manager 12Other 3What is your main functional role?(% respondents).IT 46Strategy and business development 13General management 13Finance 8Marketing and sales 5Risk 4Customer service 3Supply-chain management 2Operations and production 2R&D 1Legal 1Other 1 October 2010 NEXT-GENERATION CIOs 27

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