Archive for June, 2008

« Older Entries

CRM News: The Business Of Information Technology Is Changing

Saturday, June 28th, 2008

CRM Applications May Move In The Cloud

With all of the changes that are once again starting to happen in IT, can you imagine how the big boys at SAP/Oracle/etc. (the traditional CRM vendors) are starting to feel? There is starting to be more and more talk about cloud computing and folks are even starting to play around with it — a clear sign of a potential disruptive influence if ever there was one. The arrival of this type of web-based computing threatens to change their business model. We can learn a lot from taking a moment to study their situation.

We’ve talked about the fact that most firms don’t seem to get the biggest bang for the buck from their expensive implementations of CRM systems. As time marches on the IT department is going to get hit with another change when folks start thinking about moving these big applications out to the cloud. In a recent interview with the Wall Street Journal, Henning Kagermann (CEO of SAP) said that he doesn’t see IT departments making this kind of move anytime soon because they are too conservative. The difference between “traditional” CRM and “web-based” CRM is that the web-based solution is designed to make it easier for the sales folks, purchasing folks, etc. Henning points out that traditional CRM solutions are really designed to be used by the management team — not the front line workers. These workers value system security and reliability over everything else and so he anticipates no significant changes soon.

Henning is a bright guy and I’d tend to agree with his view of the world if it were not for three things:

  1. Options: New firms will no longer HAVE to deploy CRM applications on their own servers — they can use a cloud. If any of these firms turns into the next Google, then there will be a mad rush to be more like them and that could cause a quick change,

  2. Pricing: if because of competition between Amazon, Google, and IBM it suddenly becomes so cheap to deploy an application in “the cloud” everything could move out almost overnight.
  3. CIO Innovations: ultimately a CRM system is only as good as the date that is entered into it. If CIOs take the lead and assume ownership of the quality (and quantity) of data that is entered into the CRM system, then suddenly the value of the system goes though the roof. In order to make this happen, CIOs will need to make the application easy to get to and easy to use — both characteristics are features of web-based applications.

Nothing ever seems to happen overnight; however, a great deal can happen in just a single business quarter. Henning is betting that IT won’t see any of these three events happen before SAP has time to create a web version of their product. Let’s see how things go…

Tags: , , ,

Posted in cloud computing, CRM, decisions, SAP | 1 Comment »

IT Judgment Calls: How To Make Good Ones

Sunday, June 22nd, 2008

How IT Leaders Can Make Better Judgment Calls

Warren Bennis is a smart guy (professor of business administration and chairman of the leadership Institute at the University of Southern California). He’s cranked out a book called Judgment: How Winning Leaders Make Great Calls and it has a few ideas that really relate to today’s IT leadership environment.

It turns out that the ability to make good judgment calls when you are a CIO or tech manager is very important (surprise!) because of the impact on others that all of your decisions make. When do these IT leaders get called on to make judgment calls? Warrne identified of the most common three areas: people, strategy, and what to do in a crises. We see the impacts of people judgments around us at work every day. Technically gifted folks who get put into a management role for which they are poorly suited, great team leaders who get bumped up and become Directors, etc. The successes in choosing the right people for the right job get reflected on the company’s bottom line. The mistakes can cause lots of damage and are expensive to replace and to repair.

Strategy judgments are the big ones that can make or break a career. In today’s hyperactive IT environment speed is often prized over accuracy. Warren brings up a great IT example in his book: Intel. Many folks don’t realize this, but Intel got its start in manufacturing and selling memory chips. When the prices in this market started eroding and the Japanese manufacturers started coming on strong, Intel had to make a judgment call: stay in the memory chip business or move on to something else? Gordon Moore and Andy Grove made the decision to move on (to CPUs) and the rest, as they say, is history. Good judgment call.

Finally, the ability to make good judgment calls in in middle of a crisis. Once again Intel serves as a good IT example. Back in 1994, as Intel was releasing the latest version of their x86 chip line it was discovered that under certain circumstances it would return the incorrect answer from a math operation. Initially Intel took the IT road in its response: it did some math and stated that the average user would only see an error once every 27,000 years. However, that didn’t sit well with most of their customers and eventually Intel had to offer to refund/replace the defective chips. This initial response was a very, very poor judgment call on Intel’s part.

So what can IT leaders do to make better judgment calls? Warren suggests that we work on improving four areas of our knowledge that are critical to making good judgment calls: self-knowledge, social-network knowledge, organizational knowledge, and stakeholder knowledge. Hmm, sure sounds like aligning the IT organization with the rest of the business would go a long way to making this a reality!

Tags: , , , ,

Posted in business strategy, crisis, Intel, judgment call, people | 2 Comments »

Congratulations On The Promotion — You’re In Trouble Now

Friday, June 20th, 2008

What if you just got promoted or accepted a new job. Plop — there you are. I’ve got some bad news for you, according to an article in the Harvard Business Review, in 2006 about 40% of the CEOs who left their jobs had lasted average of just 1.8 years. If they can’t hang on to their new jobs for very long, what makes you think that you can? It sure looks like you are going to have to quickly figure out what is going on so that you can start to show some value. Great — just how does one go about doing that?

First, just what is a new Tech Manager / CIO supposed to figure out? Guess what — it’s the same thing that a new CEO would need to determine: how to boost profitability, increase market share, overtake competitors, etc. Now the trick here is that a CEO and someone in IT will have different levels that they control. A CEO only really controls two things: hiring/firing and budgets. An IT department member actually controls more: hiring/firing, technology selection, project progress, etc. The scope of their actions may differ; however, the goals are the same.

Here’s the trick: as a new leader you will need to gather information quickly. You can expect to be given somewhere in the neighbrohood of about 3-4 months to collect what you need. Be careful: most IT folks will start with whatever they know best. The problem is that the greatest improvements in you new area of responsiblity may not come from the areas that you know best!

There are four guideposts that every new IT leader needs to keep in mind when sizing up his new responsiblities:

  • Costs / prices will always decline
  • The company’s competative position determines your options
  • Customers and sources of profits don’t stand still
  • Simplicity gets results

Using these four guideposts as you process the information that has been collected will allow you to identify the specific IT areas that are within your control for which changes will yield the greatest benefit for the firm. At the end of the day, diagnosing the issue is only the first part of the process — next you need to decide where you want your team to go. In order to get there, you will need to define and implement initiatives based on your findings. Good luck!

Tags: , , , ,

Posted in competition, guideposts, market share, new management job, profitability | 2 Comments »

When Opportunity Comes Knocking: Getting Real Value From Enterprise Systems

Tuesday, June 17th, 2008

Enterprise Systems Open Door Of Opportunity For CIOs
The good folks over at Accenture have started running some ads that are asking companies to take a long term look at the value of those really big IT projects such as CRM systems and other enterprise systems. They make a really good point that lots of companies are doing the work, but missing the point. To quote from their ad:

Companies often neglect to factor in business strategy when putting an enterprise system in place, says Kevin Carnahan, managing director of system integration for Accenture in San Francisco. Often companies err by focusing on getting software installed, but they miss the opportunity to get the analytics and the forward-looking information enterprise systems can provide, he adds. “They may get systems working in a way that keeps the business operating. That has a fundamental value, but companies need to take the extra step to transform transaction-level data into action-oriented metrics that enable management decisions.”

Elsewhere in the ad/article, they point out that the Accenture Institute for High Performance Business conducted two studies, four years apart, to examine the practices that enable companies to get more value out of their investments in enterprise systems. The studies consistently showed that senior executives’ top priority for their systems is to obtain better information for decision making. Hmm, this sounds like a job for the CIO and the IT team!

Having lived though several implementations of these types of systems, I can attest to the fact that just getting them in place and working is a bear of a task. Most of the firms that I’ve worked for have been so exhausted by the process, that they have pretty much stopped here. After all, there really aren’t a lot of stories about companies that have leveraged their enterprise systems to become more competitive. Just lots of disaster stories about when implementation projects go off track. As CIOs and IT departments strive to find new roles to replace the operations ones that are going away, it sure looks like using the enterprise systems to answer questions for the rest of the business is a great way to show value for the department.

How would one actually go about doing this? Well basically we are talking about collecting copious amounts of data and then further processing it in order to detect trends and spot abnormalities. The collection and processing tasks are well suited to the IT shop. There’s a good chance that the data will have to be cleaned and the output of the processing will have to be analyzed in order to ensure that you are not getting good looking garbage numbers.

Both of these tasks are not well suited for any other part of the company to perform. It will require a reorganization of the IT department and a retraining of the CIO so that he/she can present the results of the analysis in a way that matches how the business teams see the world. Additionally, the CIO will be feedback loop that brings requests for further analysis back to the IT team. Welcome to a brave new world — that’s opportunity that you hear knocking!

Posted in analysis, business strategy, CIO, enterprise systems, value | 3 Comments »

Paint By Numbers — The CIO’s New Job

Friday, June 13th, 2008

CIOs Must Manage Quantitative Analysis
Its becoming more and more clear that the tradition CIO job of spending time on operational issues is quickly becoming out of date. What’s a CIO really supposed to be doing with his/her time? The answer, as it’s always been, is finding ways for the IT staff to make the business able to do its job better. One relatively new way for a CIO to do this is in the area of quantitative analysis.

Quantitative analysis is the process by which often huge quantities of numbers related to the business, the economy, customers, inventory, etc. are “crunched” through custom algorithms, statistical packages, and home grown code in order to transform information into real world business knowledge that can be used to make educated business decisions. This type of processing is not easy to do — you have to be very sure that the answers that you are getting are real answers and not just good looking garbage numbers tumbling out of a fancy analysis tool. The ability to make sure the correct processing is being done is the responsibility of the quantitative analytical specialists (the really big brains).

So what role does a CIO play in all of this? Well the quantitative analytical specialists need to live somewhere in the company and since they live an breath the data that only IT can collect for them, often they become part of the IT organization and report to the CIO. The CIO is then responsible for making sure that the correct parts of the company’s operations are being monitored and metered so that the analytical specialists get the data that they need. Getting date can often be the easy part, getting good “clean” data can often be quite difficult to do. Additionally, the CIO will then be responsible for taking the analytical specialists’ outputs (which can be quite technical) and presenting them to the rest of the business in a way that they can understand and take action on. The CIO will then become part of the feedback loop as the business asks follow-on questions that can only be answered by additional analysis.

I believe that this type of function is much closer to where CIOs will be as we move forward. The CIO will truly start to deserve the “I” in their title — but it will be their ability to transform information into actionable knowledge that will make them and their department a critical part of the firm’s success.

Posted in CIO, information, knowledge, quantitative analysis | No Comments »

« Older Entries