Posts Tagged ‘ROI’

The Dark Side Of Cloud Computing

Wednesday, November 10th, 2010
Image Credit There Are Two Sides To Every Cloud…

There Are Two Sides To Every Cloud…

If IT was a game show and you were a contestant on it, right now it sure seems as though you could correctly any question that you were asked by replying “cloud computing”. That’s because cloud computing, basically outsourcing parts of your company’s IT infrastructure and applications, sure seems like a great idea. However, early reports back from the front lines by other CIOs are starting to paint a different picture…

…And Why Are We Talking About Clouds?

The reason that we’re talking about cloud computing is because it’s ushered in an era of “software as a service”, or SaaS if you want to be cool. The reason that CIOs like to talk about SaaS based applications that run in the cloud is because they offer an opportunity to save the company a lot of money.

A single user’s subscription to a SaaS application generally costs a CIO about $10 – $50 per month. The beauty of this approach is that that cost includes maintenance, support, and even the hardware that the application runs on. Oh, and all of a sudden your users can log into the application from anywhere – they don’t have to be in the office to do work.

Just How Big Of A Deal Is This?

SaaS (and Cloud Computing) is growing like a weed right now. The folks over at Gartner are telling us that in the business software market, SaaS offerings make up about 9% of what’s out there right now and it’s expected to hit 16% by 2013 because it’s growing at about 20% per year.

This is where CIOs are starting to see problems pop up. Since the whole SaaS market is growing so fast, even the people who work in it are finding themselves unable to keep up. This means that CIOs are starting to run into sales people who really don’t know what their company’s product can and cannot do. This is where problems with SaaS offerings start…

What’s Wrong With SaaS?

Unlike the glowing brochures that you’ll get from SaaS providers and the industry rag articles that are falling over themselves saying that Cloud Computing is the “next big thing”, CIOs who are on the front lines are reporting that SaaS is not a silver bullet and has its own set of problems.

In fact, some companies that went down the SaaS route are now pulling back. Gartner reports that the top reasons that CIOs have been deciding to discontinue their SaaS deployments are:

  • Difficulty in integration with existing applications
  • High cost of services
  • Lack of agility provided to the business
  • Level of investment required
  • Lack of robustness
  • Poor track record of provider
  • Poor client references
  • Inadequate security, privacy, or confidentiality
  • Didn’t meet technical requirements

Bottom Line Issues

In the end, it all comes down to money. One of the biggest attractions of SaaS is that it offers hard-pressed CIOs a way to stretch their IT budgets farther. However, CIOs that have implemented SaaS solutions are reporting that the benefits may not be so clear after all.

In the initial years, yes – the IT department will save on having to make the big CapEx spends that they would normally have to make in order to create the infrastructure to support another enterprise application. However, what seems to be missing is the ultimate reduction in headcount and infrastructure costs over time.

What All Of This Means For You

The world of IT keeps changing all the time and as CIO you’re going to have to move fast in order to keep up. SaaS offers many benefits; however, there the drawbacks are also starting to show up.

CIOs on the frontlines of SaaS deployments are reporting that they are running into issues with integrating the SaaS applications with their existing enterprise applications. Additionally, many of the economic benefits appear to be only in the first few years with the long term benefits not being nearly as clear.

Right now Cloud Computing and SaaS are hot topics that every CIO should be looking into. However, look before you leap as the saying goes…

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that IT headcount reductions should be a benefit of a SaaS deployment?

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What We’ll Be Talking About Next Time

When you become CIO, one of your main jobs will be to lead the IT department though changes. However, here is where you may run into a problem. Considering how many layoffs, cut backs, and canceled projects most IT departments have had, the last thing that your IT staff really wants is more change. What’s a CIO to do?

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Posted in SaaS | 22 Comments »

The British Are Coming, The British Are Coming – Lessons From BT

Wednesday, July 14th, 2010
Image Credit
BT Exact Had To Transform Its IT Department In Order To Survive

BT Exact Had To Transform Its IT Department In Order To Survive

Anyone can be a successful CIO – you just have to master the basics: understand what business you are in and find ways to use technology to allow the business to move faster and do more. A great example of this is BT Exact: the IT branch of British Telecom (BT) – the UK’s largest phone company. Back in 2004 they knew that they had an IT problem, but they didn’t know how to solve it…

Too Much Of A Good Thing

Every CIO has to deal with a fundamental problem: how to structure the IT department. Back in 2004 BT was ducking this problem: they didn’t have a centralized IT function. Instead, each of their business lines had their own CIO and IT staff. You can just imagine how many different IT projects were going on with little or no communication between them.

Realizing that they had a problem, BT Exact reached out and hired Al-Noor Ramji who was at the time the CIO for the U.S. based Qwest telephone company. Just imagine the mess that Al-Noor walked into on his first day on the job…!

Right Sizing

When Al-Noor arrived at BT there were approximately 4,300 IT projects going on. Since they were all operating in their own silos none of them had coordinated delivery dates and in fact many of them had no related business case to back them up.

Clearly it was time to put an end to the madness. BT undertook a massive effort to evaluate just what it was working on in its IT department. After it had halted unnecessary projects and combined similar efforts, they were left with only 29 projects.

Legacy IT systems that had been created by past projects were another problem. BT was paying to keep 3,000 such systems up and running. Al-Noor had them take a look at what each system was being used to do and in the end they were able to decommission 700 of these systems.

What Have You Done For Me Lately?

All of these changes were just a lead in to what Al-Noor was planning on doing. As we all know, often IT projects can take a long time to implement. When these projects run on and on for a long time, it’s very easy to lose sight of what we were trying to do in the first place. At BT they’ve come up with a solution to this problem.

They’ve implemented a 90-day project management review cycle for all IT projects. This means that a set of agreed on metrics are established for each project at the start of every 90-day cycle: customer satisfaction, ROI, etc.

At the end of a 90-day cycle, each project team reviews how well they met the goals that had been established at the start of the cycle. If the goals are met and the project meets its objective for that cycle, everyone on the project gets a bonus for their work.

This sound all fine and dandy, but in the early days there weren’t any bonuses being handed out. However, things have changed since then. Now BT has seen the cost of projects go down by 19% and they’ve seen their IT productivity more than double.

What All Of This Means For You

When you become CIO you may find yourself walking into a mess as complicated as the one that Al-Noor found himself in. With a little luck, you’ll be able to use what he did to fix things quickly.

Getting rid of IT silos and eliminating projects that aren’t going to have any business value to the company is a great way to start. Implementing an effective project management system that will allow everyone to keep their eyes on the prize is also needed.

Once again, becoming a successful CIO is not impossible. Taking the time to make sure that you know where the company wants to go and then shaping the IT department to get you there is exactly what a successful CIO does.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills

Question For You: Do you think a 90-day cycle is too long or too short?

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

What We’ll Be Talking About Next Time

When you go hunting for your next IT job (and it may be sooner than later), will your resume be up to the job? Come to think of it, when was the last time you dusted off and updated your resume?

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Posted in IT project | 1 Comment »

Is Life Easier If You Are A CIO Who Works For The U.S. Government?

Wednesday, May 26th, 2010
Image Credit Federal CIOs Have The Same Issues That Everyone Else Has

Federal CIOs Have The Same Issues That Everyone Else Has

You want to become a CIO. You probably want to become a CIO in the private sector – you know, those companies that have owners or stockholders that they always have to work to keep happy. Why haven’t you spent any time thinking about becoming a CIO who works for the biggest employer out there: the U.S. Federal government?

Big Changes Coming

The U.S. Federal government (the one that runs the country, not the states) employs over 300 CIOs that manage all of the different parts of the operation. You would think that federal CIOs would have it easier: I mean they don’t really have to worry about keeping shareholders happy or anything like that, do they?

You need to keep in mind that although a federal CIO doesn’t have to worry about the same things as a private sector CIO, they have a whole bunch of different issues that occupy their time. One big issue is that every four years they may have a completely new boss what with the presidential elections and all that.

As the U.S. experiences the effects of the global recession just like everyone else, federal CIOs are feeling the pressure to show that their IT departments can deliver a solid return on investment (ROI) .

It’s becoming pretty clear that there is a lot of IT funding for the things that you would expect a federal CIO to be working on: things like wireless projects and public safety projects. However, this doesn’t leave a lot left over for all the other things that an IT department is supposed to be working on,

What Are A Federal CIO’s Biggest Priorities?

One of the key ways to tell if being a federal CIO is any different from being a private sector CIO is by taking a look at what’s on their list of projects. Federal CIOs always have to be nimble enough to adjust to a new administration’s priorities which may differ from the last administration’s. This can cause a big change in what the IT department spends their time working on.

Right now the federal CIOs are reporting that the key programs that their departments are working on include:

How Are They Going To Be Successful?

So if you were a federal CIO right now, how would you go about pulling off all of these initiatives while dealing with the tightest budgets in years? As you might be able to guess, there is no one magic answer to this question.

In a survey done by InformationWeek magazine, 21% of federal CIOs said that they were using Lean Six Sigma. 29% reported that they were using ITIL. Even within the military there was no one way to go: the U.S. Army is using Lean Six Sigma while the Navy is planning on using ITIL.

What All Of This Means For You

In your future, there is actually a good chance that you might at some time become a federal CIO – there sure are a lot of them out there. You might have thought that this was an easy route to take – no pressure from owners / shareholders. Think again.

Federal CIOs have to deal with a great deal of upheaval in their upper management structure on a cyclic basis. On top of that even during difficult economic times they need to find ways to push forward on important IT programs that will transform their organizations.

If you do become a federal CIO, I sure hope that you like change. You’ll have your own set of issues to worry about, but at least things won’t be boring!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills

Question For You: Do you think that it would be easier or harder to be a Federal CIO than being a private sector CIO?

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

What We’ll Be Talking About Next Time

I hope that you wore your good clothes to work today, because there’s a pretty fair chance that you might end up on video sometime during the day. The arrival of low-cost video cameras and high quality video processing software has effectively made it ridiculously easy to create multimedia content. This has got to affect what a CIO does, but how?

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Posted in CIO | No Comments »