Posts Tagged ‘outsourcing’

« Older Entries

Satyam Scandal: CIOs Need To Talk With Their CFOs

Monday, June 29th, 2009
Fraud At Satyam Means That How CIOs Do Outsourcing Needs To Be Rethought

Fraud At Satyam Means That How CIOs Do Outsourcing Needs To Be Rethought

Didn’t we solve that whole outsourcing thing years ago? Specifically aren’t the IT and the Finance departments on the same page when it comes to not only IF we should outsource some of the IT work, but also HOW it should be outsourced? If this is true, than what does the Satyam scandal mean for your IT / Finance relationship?

The Satyam Scandal

Just in case there is anyone out there who doesn’t know what happened at Satyam, perhaps a quick review is in order. Satyam Computer Services is based in India, has a work force of 53,000 and operations in 66 countries. They were very successful and served more than a third of the U.S. Fortune 500 companies.

Back in January the then CEO of Satyam, Ramalinga Raju, revealed that he and his CFO had been conducting a massive fraud – they significantly inflated its earnings and assets for years. Basically they were losing money hand over foot. In January they revealed that 50.4 billion rupees, or $1.04 billion, of the 53.6 billion rupees in cash and bank loans the company listed as assets for its second quarter, which ended in September, were nonexistent. Poof!

Impact Of The Fraud

What this means for firms that do outsourcing business with Satyam is that the firm might fold any day (perhaps you are one of these firms!). All of a sudden, outsourcing contracts that had appeared to be solid now seem to be not so solid. Most firms that outsource their work don’t necessarily have a good contingency plan for what to do if their outsourcing partner is suddenly unable to perform the work.

What Needs To Be Done

The Satyma scandal should serve as a wake-up call to CIOs everywhere. Oursourcing can never be done the same as it’s been done in the past. Here’s what needs to change:

  • Finance Needs To Play A Role: the IT department is responsible for making sure that the outsourcing company has the needed technical skills, but the Finance department needs to play a bigger role to make sure that the outsourcing firm can stay in business over time.
  • More Baskets For Your Eggs: it’s time to start to diversify your outsourcing activities in order to lower your risk profile. Detailed technical work needs to be moved around every so often so that not just one vendor knows how to do the work.
  • Update Your Contracts: create shorter contracts that are more flexible. Make sure that you are not tied to a given outsourcer for too long just in case things start to go wrong – you might want to move your work to another outsourcer quickly.

Final Thoughts

India has now had their version of Enron / Worldcom. Hopefully it will serve as a wakeup call for all CIOs who outsource their work that greater due diligence needs to be done even as the world continues to move faster. By working more closely with Finance, CIOs can apply IT to enable the rest of the company to grow quicker, move faster, and do more.

Questions For You

When you selected an outsourcer, did you do a detailed financial due diligence on them? Was your finance department involved? Has your finance department remained involved in evaluating the health of your outsourcer(s)? Do you have a contingency plan in place that you could us if your outsourcer went out of business? Leave me a comment and let me know what you are thinking.

Click here to get automatic updates when
The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

Data Security. There I said it. It sorta lays there like a big lump of coal and everyone in the company stands around looking at it wondering who’s responsibility it is to do something about it.

Nobody, including CIOs really wants to touch it for one very simple reason: it’s a losing proposition…

Tags: , , , , , , , , , , , , ,
Posted in outsource | No Comments »

CIOs And The Governance Problem

Monday, June 1st, 2009
CIOs Have A Lot Of Extra Work That Nobody Ever Sees

CIOs Have A Lot Of Extra Work That Nobody Ever Sees

All too often, an outsider looking in would have the mistaken impression that the life of a CIO was filled with decisions about what high-tech project to undertake next or how to better align the IT department with the rest of the company. The reality is that a great deal of a CIOs time is spent worrying about internal controls – not terribly glamorous, but critical if a CIO wants to keep his / her job.

Just What Is Due Diligence?

Remember Enron? Or Worldcom? These are the guys that you can thank for today’s business environment which includes a lot of relatively new safeguards that require a lot of work to report on (such as the Sarbanes-Oxley Act of 2002).

Although it’s the CEO who is ultimately on the line to ensure that there is no funny business going on, it’s the CIO who creates the reports that the CEO uses to keep tabs on the firm. If something slips past the CIO, then he/she will be slipping out the door to search for a new job.

However, it’s not just the accounting systems that the CIO is responsible for keep track of. There’s a lot more where that came from.

Just What Is A CIO Responsible For Keeping Track Of?

There are four major areas that any good CIO knows that he/she needs to stay on top of. The problem is that they are each so large that any one of them could turn into a full-time job. Here’s the list:

  1. Outsourcing: you thought that once the outsourcing contract was signed, the CIO’s job was done? The CIO has to determine what work goes to the outsourcer, what stays at home, and how different pieces get stitched together when they are completed.
  2. Information Asset Value: There is no way that a CIO can protect all of the data that streams into a company or that is generated within a company. Instead, what he /she has to do is to come up with a way to prioritize the risk associated with each piece of information and then work very hard to secure the important stuff.
  3. New Technology: There will always be new, better, faster technologies showing up on your doorstep every day. Determining when it makes sense to buy new technology is the role that a CIO was born to play.
  4. Competition: there are two sides to this coin. The first has to do with having the CIO make sure that competitive information flows in, gets processed, and then finds its way to the decision makers who need to know about it. The other side is to make sure that the firm has the information defenses in place to resist and repel any competitor who tries to obtain information that they should not have.

How Can A CIO Ever Be Successful?

In order to be successful, a CIO must first admit that he / she can’t do it all by himself / herself. Having the board of directors and senior management backing IT initiatives is a key part of being successful.

Keep in mind that security needs to be baked in – it can’t be an afterthought. One way to make life easier is to adopt and implement standards - this way you can piggyback on the work that other smart people have done.

Questions For You

What do you think about the job of CIO – is it a good job or is it one that you can never win at? How involved in managing the outsourcing do you think a CIO should be? How do you come up with a value for your information assets? Leave me a comment and let me know what you are thinking.

Click here to get automatic updates when
         The Accidental Successful CIO Blog is updated.

Coming Up Next Time

In the end, it all comes down to execution. No, not chopping heads off, but rather how you go about having your IT department perform the tasks that the business needs them to do. How hard could this possibly be…?

Tags: , , , , , , , ,
Posted in information | 1 Comment »

Practical IT Clouds: What To Do AFTER The Hype

Wednesday, May 20th, 2009
Cloud Computing Will Require A Whole Different Set Of IT Skills

Cloud Computing Will Require A Whole Different Set Of IT Skills

Talk about your latest buzz word overkill! Just when the “Web 2.0″ madness had just about hit its peak, along came “Cloud Computing” and took its crown. It’s looking like cloud computing is here to stay, so what’s an IT department to do once they get done studying the whole thing?

Your IT department will eventually use cloud computing. There, I’ve said it. If you don’t believe me, then go back and read those words to yourself out-loud several times until you do. It’s coming and there’s nothing that you can do to stop it. Just like outsourcing, it makes good economic sense and so all other objections will be worked out over time.

The idea that organizations can increase their computing power without having to buy, install, maintain, power, and cool more and more boxes is just too attractive to the bean counters to ignore. This puts IT in a tricky spot: our world is getting ready to be turned upside down – are you ready?

Here’s the problem: a lot of the support jobs that IT does today will go away along with “the boxes”. What nobody seems to realize is that they will be replaced by new IT jobs. If you’re running an IT shop, you’d better be ready!

Here are the new Cloud Computing tasks that are coming your way that you’re going to have to find ways to staff:

  • Extend: you’re going to have to come up with ways to create bridges between your existing network environment and the cloud. Oh, and then you’re going to have staff to maintain those bridges.
  • Pick: you’re going to have to pick a couple of cloud service providers. Once you’re in bed with them, you are going to have to have staff to monitor how they are performing and to provide the human interface to fix the issues that always show up.
  • Monitor: forget outages, what about day-to-day issues? You are going to need staff to monitor and mange the apps that you have running “in the cloud”.
  • Identify: who on your staff is allowed to do what? Since the old rules about getting access to boxes no longer apply, you’re going to need new rules and new staff to enforce and update them.
  • Encrypt: since you are now going to be storing data off site and “out there”, encryption becomes more than a nice-to-have, now it’s a necessity. Somebody on your staff is going to have to be double checking everything all the time to make sure that it REALLY IS encrypted.
  • Plan: for the worst. Data link outages are going to be a much bigger deal then they ever used to be. How will you handle being disconnected from your cloud for an hour, a day, a week? Somebody had better be put in charge of solving this problem and keeping this solution updated.
  • Mange: your bandwidth. Now that the link between you and your cloud has become critical to how the business runs, you had better have someone on it at all times.

We’re looking at a brave new future. Do you have the right staff with the right set of skills in order to make the most of it?

Is your IT shop currently using cloud computing or just thinking about it? How does the rest of the business feel about this? Do you have any plans on retraining your staff to work in a cloud computing world? How do they feel about this? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , , , , ,
Posted in cloud computing | No Comments »

Who Gets To Make Decisions In Your IT Shop?

Monday, February 23rd, 2009
Where IT Decisions Get Made And Who Makes Them Is Very Important

Where IT Decisions Get Made And Who Makes Them Is Very Important

A recent study of 89 senior IT executives in a wide range of industries was done in order to get the answer to a seemingly simple question: who’s in charge here?

In these days of reigned in IT spending, decisions about how much to spend and what to spend it on seem to have migrated even farther up the command ladder. It turns out that this is causing an IT credibility gap: others are making decisions that we then have to deliver on. Is this any way to run a company?

I’m hoping that we can all agree that having IT work hand-in-hand with the rest of the company has never been more important. This means that getting decision rights and accountability right is now critical to an IT department’s success.

If you boil it down, IT departments are responsible for not only hardware and software assets, but also for all customer and supplier data along with many automated business  processes. This means that if IT decision making is not properly placed, the impacts will be felt company wide.

There are two ways to get decision making wrong. The first is called a techocentric gap and this is when IT is in charge of all decisions. We’ve all see what this can do. The other is called a business gap – this is when all decision making is done outside of the IT department. Neither of these solutions is the right way to go.

In the end, there are really three types of IT decisions that need to be made. Technical decisions around IT infrastructure and architecture probably need to reside primarily within IT. IT investment and strategic decisions need to be made jointly by IT management and business top management. Finally, once again IT top management and business top management need to work together to make outsourcing decisions.

Where do IT decisions get made in your IT department? Is there a gap between IT and the business? Does IT get held responsible for decisions that they played no role in making? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , ,
Posted in decisions | 1 Comment »

Can We Make IT Any More Complex Than It Is?

Thursday, February 5th, 2009
The World Has Become More Complex, But Has IT Become Too Complex?

The World Has Become More Complex, But Has IT Become Too Complex?

One of the reasons that the rest of the company doesn’t seem to really like those of us in the IT department is because we seem to make everything so much more complex when we get involved. First it was our networking issues (Frame Relay, ATM, Ethernet), then it was our server issues (multicore, Intel vs. AMD, caching), and lately it seems to be software design (SaaS, Cloud Computing, Web 2.0). When will this ever end?

Have we screwed things up? Is the CFO and the rest of the financial side of the business correct when they accuse us of buying the latest technology just to play around with it? It turns out, that everyone is probably just a little bit correct this time around.

So here’s the scoop: yes, information technology IS becoming more complex. Sorry about that. The reason that IT is becoming more complex is because the world in which we work is becoming more complex. I mean think about it, everyone is going global, expanding (yes,even now), and developing new technologies. What’s an IT’er to do?

The so-called “traditional” ways of managing IT no longer work. Now to be fair to us, we have made a lot of progress in simplifying the stuff that we already have. We’ve been hard at work standardizing and consolidating IT infrastructure and it’s starting to show results. But then there’s that SOA thing…

Server and storage virtualization has definitely been a double edged sword. It has reduced the number of boxes that we mange, but how we manage the ones that we’ve got has become more complex. The same can be said for all of the new-fangled software architectures that we’ve been dreaming up: SaaS, SoA, Cloud Computing, Web 2.0, etc. These new approaches to assembling software components help us to meet regulatory needs and better ensure data security; however, they sure seem to use an unnecessary number of acronyms to get the job done!

When you introduce mobility into the mix, you’ve just about sealed the deal. Trying to support a wide range of devices that were never designed to work together, getting legacy apps to talk to mobile devices, and keeping everything secure makes life even more complex.

Great, so the world is becoming more complex, IT is becoming more complex, and everyone thinks that we’re just sitting around playing with hi-tech toys. How can we possibly stay on top of all of this complexity? Here are five suggestions on how a hard working IT person can actively keep complexity to a minimum in your life:

  1. Standardize: Simplify your life by standardizing everything that you can get your hands on. Once you’ve done this, start to consolidate as much as you can.
  2. Get More Bang For Your Buck: make sure that you are spending your IT time and money where it’s going to produce the greatest return. Too much time spent on the wrong things will just make life that much more complex.
  3. Prune – Don’t Cut: There will always be times when the IT budget needs to be cut back. When these times arrive, don’t do wholesale across the board cuts, instead trim projects as needed. You may even boost budgets of critical projects.
  4. Use What You’ve Got: Make sure that the rest of the company has access to the IT assets that you already have. Putting information online and providing access to enhanced analytical tools can go a long way in showing IT’s value to the rest of the organization.
  5. Outsource Only When Necessary: Outsourcing does not simplify things, rather it creates more management complexity.  If you are too quick to outsource work, then you’ll find yourself sitting on top of a management nightmare.

Do you feel that your IT shop has become more complex in the past few years? Do you think that the rest of the business thinks that it’s harder to do business with IT because of increased IT complexity? What steps are you taking to simplify your operations? Are they working? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , ,
Posted in business alignment | 8 Comments »

« Older Entries