Budgets cut or frozen, and a lot of important projects put on hold
The good news: things are starting to thaw… (just released survey…)
Recession may be over, but slow recovery Total world GDP forecast at a modest 2.5% for 2010, most of that in emerging markets IMF: U.S. GDP at less than 1% IMF World Economic Outlook, update July 2009 http://www.imf.org/external/pubs/ft/weo/2009/update/02/index.htm
For most businesses, no way to predict what’s going to happen in the year ahead. even the quarter
money to invest in new business opportunities is still in short supply
This is the power house at the old Bethlehem Steel plant. You don’t have to be in the steel industry to know that things are changing: Detroit Music industry Publishing… [click] Here in Nashville, over a third of manufacturing jobs lost in the past decade. Same across the country. At the same time, employment increased almost 40% percent in educational and health services, 20.4 percent in leisure and hospitality, and 9.8 percent in professional and business services. (Nashville Business Journal, Jan. 1, 2010) Even the most traditional industries are becoming part of the information economy http://nashville.bizjournals.com/nashville/stories/2010/01/04/story1.html?b=1262581200^2662101)
In the past decade, Nashville lost over a third of its manufacturing jobs. Same across the country. At the same time, employment increased almost 40% percent in educational and health services, 20.4 percent in leisure and hospitality, and 9.8 percent in professional and business services. (Nashville Business Journal, Jan. 1, 2010 Even the most traditional industries are becoming part of the information economy http://nashville.bizjournals.com/nashville/stories/2010/01/04/story1.html?b=1262581200^2662101)
The holy grail for 2010 is profitable growth In sluggish economy = creative tension Requires selective investment Little room for error Still have to reduce operating costs as much as possible. To balance tension, businesses need excellent management abilities, customer insight, and flexible, responsive, lower-cost IT
While there are many things companies can do to achieve profitable growth, today IT is one of the most important. In fact, according to research by MIT CISR, firms that are IT Savvy are 20% more profitable than their competitors. This is because everything about business is becoming more digitized. There are five main characteristics of IT savvy companies: Senior management committed to using IT strategically IT is integrated into all aspects of the business Company has a culture of collaboration and of sharing data and business processes Employees are empowered with great systems and information Management learns from experience by embedding lessons of the past into its governance process But how do you get there?
This creates a mandate for CIOs
And it presents them w/ a seeming dilemma: To help businesses achieve profitable growth, IT has to become more operationally efficient AND enable agility, customer responsiveness and innovation. Many people think these two areas of focus are conflicting – that a leader (for example, a CIO) or an organization (for example, IT) can be good at one or the other but not both at the same time. They argue for a separation of operational IT and tech-enabled innovation. While that may be necessary in some companies, it’s certainly not an absolute.
oversimplified metaphor? illustrative nonetheless. Organizations with relatively immature IT may have trouble delivering both efficiency and innovation at the same time [ Play video clips] Video 1: http://www.youtube.com/watch?v=AqCYtFP3z98 [Stop video 1 at :35] This, sadly, is what most people think IT is capable of. Video 2: http://www.youtube.com/watch?v=b2cZVfhRaMc More mature organizations, however, can be much more versatile. [Pause at :27 … restart at :57 … stop at 1:33] She makes this look easy. The end game for CIOs for 2010 will be the ability to both run efficient operations AND help the company better understand what’s going on with customers and quickly innovate new products around that customer insight.
Smart CIOs are taking on this challenge
When it comes to efficiency, it’s time to make some tough calls. both need and opportunity are here now
According to various surveys, the average company still spends 70% of its IT dollars on non-discretionary fixed costs. Just think if you could shift an additional 20% of that to providing new capabilities – and make your core systems better at the same time. Consolidate, standardize, optimize Not only reduces fixed costs; reduces operating complexities, making it easier to respond quickly as business conditions change. And by reducing the number of computing components, CIOs can also improve service levels, because rather than having just a few people expert in each of hundreds of systems, the organization could have hundreds of people expert in just a few
The problem in many companies: IT is a mess. Over the years, companies have built up system upon system, feature upon feature, until their infrastructure looks like this. There’s useful stuff down here – the furnace, foundation, some tools. But most of it is rarely used and never will be. No one wants to give up their pet systems time to clean house Companies just can’t afford to have a dozen different ERPs anymore (or a dozen of any other fundamental system)
It’s not like CIOs don’t know this is a problem, but fixing IT, like laying any new infrastructure, takes money. And money is scarce.
There is competition for resources inside most organizations that lack good methods for deciding where to invest in IT. And the competition isn’t just one IT project against another, but all capital spending – is your company going to spend money on a new multi-million-dollar software package or a new warehouse or acquisition? Key CIO competencies for 2010 will include negotiating skills, demand management, portfolio management and developing more believable business cases.
Problem is: Even though IT Savvy firms love IT, in many companies the relationship between IT and business executives is still contentious, creating a need for books like this one. This has got to change.
Companies have to face up to reality: they can’t do everything To do what’s most important, business & IT leaders have to work together to prioritize IT projects and spending across the enterprise
Organizations that have had to dramatically cut their IT budgets have gotten very resourceful. SC Technical Colleges 30% cut, while facing greater demand than ever – people wanting to reskill after losing their jobs; 2 – 3 year waiting list for nursing school yet can’t increase fees In addition to traditional cost-cutting [e.g., consolidating 16 ERPs], innovating around service: distance learning, provide education to more people at lower cost
Cisco got radical when it held its Global Sales Meeting virtually this past year. [stats] [CLICK] Satisfaction scores for the sessions comparable to previous events 3 global Contact Centers, 24x7 technical monitoring & support >8,000 participants in group chat within the “Chat Zone”
>13,000 active players of the alternate reality game “The Threshold” (expected 7,000) YES, people missed seeing their colleagues in person, but at 10% of the cost, that’s a tradeoff more companies will make in 2010. To cut costs, CIOs are also testing the waters with Cloud computing, renegotiating – or seeking alternatives to – traditional licensing agreements, and bringing work back in house that they have paid others to do over the past 10 years. There’s a lot going on!
At the same time that IT is lowering its own costs and making the businesses more efficient, it has a critical role to play in most aspects of business innovation today.
To help their companies understand and take advantage of new opportunities, IS will have to reach out beyond its own walls like never before to: New and existing customers – global and extremely diverse Emerging markets Gen Y Business intelligence once again ranks in the top three of CIOs’ technology priorities this year. Experiment now w/new delivery and offerings
But IT’s role doesn’t stop at analytics. Just about every aspect of business is being transformed by information technology, from the very products companies sell to how they create, store, market and distribute them. ----------------- This is being accelerated by what Cisco calls hyper-connectivity. In a white paper called Hyperconnectivity and the Approaching Zettabyte Era, they describe how this trend is being fueled by four things: the growing penetration of high-speed broadband the expansion of digital screen surface area and resolution the proliferation of network-enabled devices the increases in the power and speed of computing devices. http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/VNI_Hyperconnectivity_WP.html
The changes in the product world are astounding, with the mechanical becoming digital Products that you can drop on your foot are not only more information-enabled; in some cases, that is becoming more important to their differentiation than other attributes
That’s certainly what’s happening with cars. In this new Lexus, a joy stick has supplanted the stick shift
Cars were prominent at this year’s Consumer Electronics Show
In the future, Whirlpool will sell appliances that can communicate with the planned smart power grid to save energy
think about the data that gets collected when someone reads a book on a Kindle. what might Amazon – or the author or publisher – do with that information? how might that influence future products?
Increasingly, IT will be developing for a full-functioning internet-based mobile world Todd Pierce, Genentech, 30 apps, including SAP shopping cart [http://lundbergmedia.com]
Companies are just scratching the surface of what enterprise social networking can do for them. People connecting to each other for knowledge sharing and collaboration Employees tag themselves – and others can tag them too IBM’s system lets employees take a defined group and view the profile pages of the individual members. It creates mashups, maps of where people are – you can drill into a particular community or subject area and see who’s working in those areas. Networking diagram - who you know that knows somebody who knows somebody who knows something relevant useful if you’re looking for a subject matter expert or looking to influence someone you don’t have a direct relationship with Many other companies getting into this now. Sabretown Genepool Rspace Companies are finding that, in combination with unified communications tools and “presence,” social tools are a way to “collapse” the organization – to achieve the speed and knowledge sharing of a small organization on a large scale, and to create a sense of engagement and personal investment among employees. The great news is there are so many different tools available to do this, and the barriers to entry are low. IBM Lotus MS Sharepoint to… Jive SocialText http://www.socialnetworkingwatch.com/2009/01/
The question is no longer does IT matter… … how do you make it matter when everyone has access to the same tools? Competitive advantage comes from how well you use technology, and how quickly your business is able to respond to new opportunities
Last week at National Retail Federation conference http://www.fastforwardblog.com/2010/01/14/top-cios-say-social-networks-now-drive-innovation/
The CIOs at IT Savvy firms are not just running the engine room. They’re transforming their businesses and partnering to drive innovation Members of the CIO Executive Council developed this model for the current and future State of the CIO. 3 types of CIO (talk about three types) no one is just one thing [CLICK] to be valuable and relevant long term, CIOs MUST move to the right in terms of how they allocate time. The majority of their focus must shift toward business strategist activities. ADVANCE BUILD SLIDE. And they are. Almost twice the number of CIOs fell into the Business Strategist slice as did in 2008 For the third year in a row, the number of Business Strategist CIOs has increased. 2008 = 12% 2009 = 18% 2010 = 21% The three role types are defined as: Function Heads: These CIOs are primarily focused on activities that face the IT organization and are intended to achieve IT operational excellence. Transformational Leaders: These CIOs are primarily focused on creating change for their enterprise through close partnerships with business operations and cross-functional corporate departments. CIO leadership activities are centered more on process reengineering and automation, not just delivering the basic IT services. Business Strategists: These CIOs focus most of their attention on driving business strategy for competitive advantage, with a focus on external business issues, customers and markets.
It’s time to for CIOs to clean house and rebuild their technology infrastructure to support a more flexible, agile, lower-cost business operating model The only way to get things done is together. Companies need IS governance mechanisms, decision making models and operations that enable real partnership. In addition to shifting budget dollars to new business opportunities, CIOs have to shift their own attention – and that of their teams – to these efforts as well.
It’s going to be an exciting 2010!
CIO 2010 Abbie Lundberg, Lundberg Media Former Editor in Chief, CIO Magazine
Being highly responsive to our business partners’ and customers’ needs and creating standardized processes and technology platforms can seem like conflicting goals, but doing both is key to maximizing value. Source: SmartEnterpriseMag.com Part of creating change involves holding two incompatible ideas in your head at the same time and somehow still functioning. Stuart McGuigan, CIO, CVS Caremark
There are very few secrets out there anymore. The only competitive advantage becomes speed. Organizations need to keep embracing innovation and new technology models. At the end of the day, it’s about getting from point A to point B quicker than everybody else. -- Rollin Ford, CIO of Wal-Mart Source: The Fast Forward Blog
IT Savvy Firms Have Business Savvy CIOs Distribution of CIOs In 2008 Future Distribution of CIOs 34% 45% 21% Distribution Today
Rebuild for Simplicity & Agility Partner to Make It Happen Innovate to Grow The Upshot
Thank You www.slideshare.net/abbielundberg [email_address] It’s going to be an exciting 2010!