Archive for July, 2008

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Why CIOs Don’t Matter Any More

Wednesday, July 30th, 2008

CIOs don't matter because they aren't part of a business' strategic planning process

Q: What do you call a business executive who doesn’t get any respect?

A: CIO

Ok, so the joke is a little bit lame; however, the point is clear: all too often the CIO is a non-player when it comes to whose in charge in the executive suite. He/she will spend their time trying to put out IT fires only to discover that they don’t have a seat at the strategic planning table.

The Digital IQ survey came out awhile ago from Diamond Management and it pretty much confirmed what we all know. Although 80% of the companies surveyed said that IT is strategic to their company, only 33% say that their CIOs are deeply involved in their strategic planning process. Why is this? In short, I believe that the IT department is viewed as being a collection of weirdos and outcasts that do a lot of things that have no bearing on helping the rest of the company to succeed. The CIO, as the leader of the IT department, is seen as a weirdo executive by proxy and since nobody really understands what he/she does, they don’t invite the CIO to the strategy planning party.

So what do CIOs spend their time doing? The gut answer would be playing solitaire and shopping on eBay; however, I’m hoping that is incorrect. The survey says that CIO spend less than 10% of their time managing IT operations. Since CIOs aren’t spending their time dealing with strategic issues, they end up spending it on tactical issues and then justifying their tactics. What a waste!

One of the reasons that the CIO is in such a bad situation is because the survey reports that in only about 66% of the companys did the CEO advocate IT as a strategic asset. Without this support, the IT department has no support at the strategic level of planning.

What is really interesting about this survey is what the financial firms have to say – they get it right. They involve both the CIO and their IT departments in the strategic planning process.Why you ask? It’s simple: financial firms set themselves apart from their competition by the functionality and the quality of their IT tools. They are required to develop these tools themselves in order to stay ahead of the pack.

So where does this leave us? If CIOs want to start mattering to their firms and being invited to participate in the strategic planning part of the business, then they are going to have to change themselves and their departments. They are going to have to remake their department over in the image of the rest of the company. Instead of being viewed as a group of loaners, they need to be seen as a part of the process. The CIO needs to build an IT department that walks, talks, and looks like the rest of the business. Only by doing this will he/she finally be able to fully participate in the business planning process.

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Posted in business strategy, ceo, CIO, strategic planning | 15 Comments »

Here’s What’s Really Wrong With IT And How To Fix It

Monday, July 28th, 2008

Information Technology (IT) is broken and here's how to fix it

No holding back this time, I’m just going to let it all come out. I just got done reading my 1,000th article on how to improve an IT department and it was as worthless as most of the others that I’ve read. For way too long I’ve been listening to gurus, consultants, and other so-called smart people who have proposed band-aid after band-aid to stop the hemoraging that is going on in IT right now. As an industry we seem to be going through CIO-of-the-month scenarios, my friends and colleagues are burned out and fed up, and now we’re learning that the next generation of kids don’t want to have anything to do with IT.


What’s Wrong With IT?
In a nutshell, we’re too different. Yeah, yeah, I know that we treasure our late start times, all night work sessions, flip-flops at the office and multi-screen desktops that sit in front of our original Star Wars posters, but it’s killing us. Foosball tables in the hallways, SQL command hierarchy charts on the wall, and action figures lined up on top of cube partitions don’t do a good job of saying “we’re part of this company”. Instead, they say “we’re different”. That’s the problem.

I’m not sure how this all started, but I blame air-conditioning. The early mainframe computers could only operate from within well air-conditioned rooms and so naturally the technicians who maintained and programmed them were placed in the same room or near by. This allowed them to be hidden from the rest of the company. Out of sight, out of mind. The action figures showed up, the dress code got thrown away, and the MIS team stopped trying to fit in.

Who Cares?
You do. Your career is going to be very short and you are going to be quite bitter when your IT job goes away. The company views you and your department as a cost not an asset and they are even now looking for ways to reduce the expense that is known as you.

The CIO cares because he/she just doesn’t seem to understand why none of the other executives really want to play with them. The reason is simple, the IT department is weird and so by extension the CIO must be weird and who really want’s to play with a weirdo?

What To Do?
In the immortal words of the hair removal lady in the movie The 40 Year-Old Virgin, “…this is going to hurt.” What needs to be done is that IT needs to look, act, and talk like the other parts of the company. I’m going to go one step further and say that the role model that they need to follow is the finance department. “Ouch!” you say. Yep, put the long sleeve shirts back on, jettison the foosball table, take down the star wars posters, and let’s all get back to moving the company forward.

The thinking behind this is simple: who do we like to work with? We like to work with people who are like us. That means that if the IT department really wants to align itself with the rest of the business, then it needs to start to look like, sound like, and act like the other departments. The finance department is generally well respected and has the ear of the senior management team so they are a great role model for the IT department. In fact, the IT department should try to be viewed as finance’s “brother department” — if you’re talking to one, you should be talking to both.

What would this do for a CIO? First it would instantly boost his / her respectability. All of a sudden everyone would realize that the CIO and the IT department were really part of the company and that they were working to make a profit also. This would allow the CIO to start to take on different information management tasks that showed real value to the company. Finally! Alignment would be possible.

Don’t get me wrong here, I like foosball as much as the next IT staffer. However, I believe that the “IT markings” need to be taken down so that we can blend in with the rest of the company. There should be some special place buried deep within the IT department that can be turned into a shrine for IT. This is the place where the IT employees can go to indulge in IT talk and, perhaps, play some foosball. However, once they leave this special palace, they should re-enter a workplace that looks like they are a part of the rest of the company.

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Posted in align, alignment, CIO, finance, IT, jargon, weird | 26 Comments »

Are You A Stuck-In-The-Mud IT Manager? Here’s How To Save Your Career

Wednesday, July 23rd, 2008

CIOs can get their career stuck in the mud and need help getting out

Most CIOs that say that their departments have become “a part of the company’s strategic planning process” are just flat out lying. In reality, CIOs are struggling to change how they are viewed in the company and likewise how everyone who works for them is viewed. Sounds like we all need some guidance here. Current estimates are that only about 20% of firms are doing a good job of aligning their IT shop with the rest of the business.

Patrick Gray is an author and a consultant over at the consulting firm Prevoyance Group. In a recent interview that he had with CIO magazine, Patrick had a number of interesting things to say about the state of CIOs and their tech mangers right now:

  • The Opportunity Is NOW!: Believe it or not, this is the time for companies to make IT into an asset instead of a cost center. Up until now, IT has been a fairly stagnant part of the company.

  • It’s All About Who You Know: The days of having a CIO that knows everything about every technology and who still likes to sit down and do some coding have officially come to an end. Going forward, it’s going to be all about the relationships that a CIO has within the company — he/she needs to have their finger on the pulse of the company. CIOs will need to be able to spot opportunities that no one else in the company can see and then use the technology and human resources that are available to them in order to capitalize on them.
  • It’s All About The Business: The key to making the CIO, the tech managers, and the whole IT department a strategic part of the business is to understand that IT is a part of the business that deals with a specific business area (technology) just like the rest of the business. This means that it needs not only the code jockeys but also the business heads to make the whole thing work.

It turns out that there is an old joke that says that “CIO” stands for “Career Is Over”. In today’s 21st Century business, nobody can afford to have that be reality any more.

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Posted in alignment, business strategy, CIO, opportunity, relationships | No Comments »

Breakthrough IT Strategy: Take A New "Path" To Success

Monday, July 21st, 2008

Shinsei Bank Used Paths To Implement Successful Enterprise IT Projects

Businesses today spent roughly 5% of their gross revenue on IT and end up with very little to show for it. A couple of very bright guys over at the Harvard Business School (David Upton and Bradley Staats) have come up with a new approach to Enterprise IT Projects. They started their research from Eric Raymond‘s (programmer / open source champion) point-of-view: most IT projects are built using the Cathedral Approach:

  • they cost a lot,
  • they take a really long time to create,
  • and they only start to deliver any value after they are all done.

The Harvard guys believe that they have come up with a different approach that slashes costs while at the same time boosting the existing business and even making it easier to launch new ones. Sound interesting? Read on!

The new IT strategy is called the “path” approach. It assumes that there is no way that you can define all of a system’s specifications at the start of a project and so instead you just focus on laying out a path for the system to be further developed over time.

As a proof that this approach works, they studied the Shinsei Bank which is a a Japanese bank. In 1998 Shinsei was in a bad spot: it had had gone bust and (due to bad loans — sound familiar?) sold to the U.S. private equity firm Ripplewood Holdings. The very smart guys at Ripplewood got Masamoto Yashiro (former chairman of Citigroup Japan) to be the CEO of this struggling bank. Yashiro decided that Sinsei needed to compete based on a strong IT department. Here’s how they used a path-based approach to do it:

  1. Instead of implementing a new “big bang” set of business software, they took a different approach. They build a modular infrastructure that would allow them to put pieces in as needed.

  2. They build new systems that mimicked the old existing systems that the bank was already using. This allowed them to switch folks over to the new system and then make gradual improvements without requiring extensive retraining.
  3. They helped to ensure that the IT department was integrated with Sinsei’s business strategy by having the CIO report directly to the CEO. Note that this is different from many U.S. firms where the CIO reports to the CFO and is effectively “hidden” from the CEO.
  4. The Sinsei business unit heads spend a lot of time learning to “talk IT”. This helps to break down internal communication barriers.
  5. Sinsei IT application development projects start by focusing on the foreseeable business objectives — not the existing business environment. In other words, they think about how they want things to work, not about how they can automate how things currently work. The IT strategy is then built to meet this forecasted future.
  6. This is key: the Sinsei business folks tell IT what they need. IT creates prototypes and has the business side use them. This causes feedback and new possible solutions are identified.

Finally, the Harvard boys identified three characteristics of a path based IT solution that will allow it to succeed:

  • Use a minimal set of standards: pick a few and stay with them. This will reduce costs and simplify the entire project.

  • Create Simple Reusable Solutions: This can be as simple as taking each IT problem, breaking it down as far as it can possibly go, and then implementing solutions to those individual problems. When the low-level problems are connected together you’ll have a flexible solution that can be easily adjusted if any component changes.
  • Create Solutions With Modularity, Not Just Modules: Getting back to the original definition of modules, this simply means that you can tinker inside of one module without impacting any of the other modules that make up a complete solution. A good example of this is to create a solution that can be rolled out in phases. This limits your risk, allows users to get used to the new business software, and allows time for changes to be made.

The Harvard boys conclude their study with one final note of caution: if you want to build on what you’ve accomplished with an IT project, then you need to ensure that you have the committed involvement of your end-users. Otherwise you can expect to fail. In the end, the Shinsei bank is doing quite well due in part to its strong IT department. The realization that most large IT projects end up failing due to internal resistance instead of any technology issues, the path based approach to IT projects has allowed Shinsei to completely re-invent itself.

Tags: enterprise systems, IT, Shinsei Bank, modular software, CIO

Posted in CIO, enterprise systems, IT, modular software, Shinsei Bank | 3 Comments »

CIO Leadership Opportunity: Learning From The Subprime Mess

Monday, July 14th, 2008

Subprime mess holds lessons for CIOs and IT departments

As we can read in the papers and see on the news everyday, those folks over in the banking world got just a bit too greedy and they are paying the price for it now. If you used the Indymac bank for your deposits, I’m hoping that you had under $100,000 in your account now that the Government has had to step in and take the bank over.

As we drift along in our little Information Technology”bubble”, it would be easy to look over at this rolling financial disaster and breath a sign of relief that this time it has nothing to do with us. But wait: that would be the wrong thing to think. This is the time for CIO’s to show innovation and that that they still bring value to the company. CIO’s and their IT team can, and indeed must, use this opportunity to quickly learn what went wrong here so that we don’t fall into the same trap. Errors in judgment by our CFO brethren, the inability to properly manage risk, and the failure of existing stress tests have already resulted in global bank losses of over $265 billion. IT could easily make the same mistakes (and in fact we might be doing so right now).

IT by it’s very nature has a great deal of risk associated with it. The subprime mess is a result of mismanagement of risk. The banks that have gotten walloped the hardest by the events of the past few months range from Merrill Lynch to Citigroup. Each of these firms shared what is called a siloed approach to risk and compounded this problem by having poor business information communication between their risk, finance, and operations groups. Is this really all that surprising? No — attaching a high profile to risk management, whether it’s in finance or IT has never been the trend.

How did this problem come about? One cause is that bankers play with investor money — not their own. Since they are betting with the bank’s capital, not their own, bankers don’t feel as though they have a lot of “skin in the game”. If a high risk IT project goes well, then everyone gets a promotion and a larger bonus. If it fails, then it’s a vendor or another department’s problem.

So why does IT have the same problem? For one thing, IT splits the analysis of a project’s risk up between the development team and the support team. The two sets of risk are rarly evaluated together — instead, the development issues are dealt with by one team and the operations issues by another team. Additionally, if the CIO gets behind a project, then speaking up and talking about project risk can often be a career limiting move.

So out of all of the chaos, who has handled the subprime situation correctly? Goldman so far is the clear winner. In December of 2006 they noticed that they were starting to see mortgage related losses. They called a meeting that included all parties involved in the mortgage business, reviewed the situation, and then Goldman started to hedge and reduce its exposure to mortgages. They still ended up taking a hit to the tune of $1.5 billion; however, they are doing a lot better than their competition.

What can CIO’s and IT learn from both the subprime mess and Goldman’s actions? First, that IT project and operations risk needs to be seen in its totality — bits and pieces can’t hid in multiple departments. Secondly, don’t allow the CIO to scare staff into not speaking up. Forget open door, the email system has to be wide open so that all comments and thoughts on various IT risk can be collected. Finally, when the risk of a project or operation changes, the IT department needs to come together as a whole, evaluate the changed situation, and make the correct long term decision.

Posted in Uncategorized | No Comments »

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