CFO’s predict the role of the CIO will not exist in 5 years

This prediction coming as it does from a survey of CFO’s to whom CIO’s are increasingly reporting is worth a closer look. The survey by IT services company Getronics canvassed 203 UK based CFO’s with 1,000 plus employees.

Key findings were:
• 17% of CFO’s believe the CIO role is in jeopardy
• 43% believe IT will merge with finance
• 77% of CFO’s had assumed greater responsibility for IT decisions over the past 2-3 years
• 50% claimed that lack of integration between finance and IT limited the impact of cost savings achievable from IT projects

Major drivers cited include the continuing commoditisation of IT services especially cloud and other outsourced services that are now available. Also apparent in the survey was a lack of trust in the IT leadership with 38% of CFO's feeling the CIO does not know enough about finance and 40% feeling the CIO does not know enough about IT!

For me the findings are more evidence of the growing paradox between the commoditisation and operationalisation of IT within business while at the same time rapid technology change is transforming the global economy and creating the opportunity for new and more effective business models. The survey results suggests that there is a lack of leadership and strategic insight from CIO’s and as a result IT is increasingly being marginalised. Comments such as that of Mark Cook the CEO of Getronics in reflecting on the survey “that only by freeing up CIO’s from the day to day burden of managing assets will organisations be able to truly realise the value that a CIO can bring to their business” ignore the fact that CIO’s have had about 30 years to stake their claim and provide true leadership to the business, most have failed to do so. A new logic for IT management is therefore needed to ensure organisations have the skill to survive and exploit the business environment of the future. The previous one has not worked, its time to try something else.

The Getronics report can be accessed at http://getronics-uk.com/knowledge-share/news-and-events/changingcfo.php

David Gwillim
Exploring the value of IT to organisations
email: david.gwillim@optusnet.com.au
blog: http://www.businessitvalue.blogspot.com/

Big data - requires cultural changes for success

Much has been written lately about ‘big data’ being the next big thing in business. There is no doubt that the explosion in data being collected by organisations opens opportunities for exploitation, especially if you can exploit it quicker than your competitors. However just deciding to trap and analyse 100 terabytes of data does not make an organisation expert at ‘big data’ or guarantee any competitive insight will result. In many companies the only real experience with large quantities of data and its use is through the finance team. The problem with the accountants is that they treat data in a ritualistic way (remember the comedy sketches of accountants making sacrifices to the god of balanced books?) so that vast quantities of the data they tend has little relevance to the organisation. To a lesser extent marketing also use data extensively though often those number are externally summarised so the nitty gritty of data management is avoided. Also most people are very weary of data and statistics, the political misuse of statistics has a lot to answer for.

All of this means that without considerable effort an organisational initiative to hop on the “big data” bandwagon is doomed to failure. Having spent 6 years of my life championing data management and analysis in a large multinational organisation here are a few suggestions to improve the chance of any ‘big data’ project:

1. Reverence for data – everything else in this list really reinforces this point. Data needs to be taken seriously to be effective. Discounting it should not be done lightly and there should be good reasons for ignoring data.
2. Culture of data accuracy – “garbage in - garbage out” is as relevant today as it ever was. Big data will only ever be useful when everyone involved in its collection puts a priority on it and is fastidiousness in ensuring quality, accuracy and timeliness of data inputs.
3. Trust the data – many a plane has crashed because the pilot decided that the instruments were wrong and they knew better. Once the systems have been set up and data validated it should be believed, nothing erodes the value of data quicker than discounting it because it tells us something we don’t want to believe.
4. Don’t shoot the messenger – when profit is sinking do you blame the finance team for recording such poor results? Data is often used as a scapegoat when times are tough, it is nothing more than a tool.

Effective use of data therefore, is dependent on a positive organisational ‘mind set’ towards the value that the data can bring. All the latest analytic tools, consultants and trends will not mean a thing, indeed will be a big waste of money unless the organisation is willing to change its mindset and accept the value of data.

David Gwillim
Exploring the value of IT to organisations
email: david.gwillim@optusnet.com.au
blog: http://www.businessitvalue.blogspot.com/

Knowledge is power and the fallacy of open communication

Being a keen observer of managerial behaviour I have always been perplexed by the paradox displayed by many managers when it comes to open communication. Most managers want their staff to be open in their communication with a “no surprises” policy but actively vet and manage any information they provide to their superiors who inevitably demand the same open information. I have even dealt with a CEO who rabidly demanded open information from his team then furiously controlled and manipulated the information he provided to the board of directors.

I often wondered how the managers in question thought this behaviour was reasonable, after all it is not exactly leading by example is it?

Of course seen through the lens of power and politics this behaviour makes perfect sense, information asymmetry is very powerful, our market economy and all political systems are built on this principle.

But is it leadership and will it stand up to the challenges of a networked economy? The answer is probably yes, even where a leader shares openly with their team, the team can develop an information advantage over other teams through information asymmetry. I am still uncomfortable with this idea though, how does it reconcile to leadership quotes such as the following Chinese Proverb “not the cry, but the flight of the wild duck, leads the flock to fly and follow”?

David Gwillim
Exploring the value of IT to organisations
email: david.gwillim@optusnet.com.au
blog: http://www.businessitvalue.blogspot.com/

CIO’s – Who do you report to? Does it matter?

The CIO industry press often states that who you report to does not matter and that it is possible to lead and be innovative from any reporting line within a company. The evidence suggests otherwise. My own research http://businessitvalue.blogspot.com.au/2011/11/is-your-it-team-strategic-or.html shows that organisations that use IT strategically always have the CIO reporting in to the CEO or is a member of the executive team. The current trend of shifting the CIO under Finance in many organisations indicates a view that IT is not strategic but operational and a cost to be minimised.

New research published this week by Price Waterhouse Coopers (PWC) adds to the evidence that reporting and organisational structure is important and does determine the role and effectiveness of IT in the organisation. They found that high performing organisations (25% of the 489 surveyed organisations) were twice as likely to have the CIO reporting to the CEO than other organisations, indeed they considered this essential to the effective use of technology. In these organisations IT regularly delivered on business needs.

They conclude that “unlike the predictions of some pundits who say IT is commoditizing, we see that those IT organisations that can effectively serve both their customers and their firm, deliver projects on time and on budget, and distil mountains of bits into meaningful insights are as rare as ever. In this way IT’s ability to drive business value is becoming more – not less – differentiated.”

With the rapid changes in technology, and even more rapid changes in technology use (think social, global, individual) the opportunities to gain competitive advantage from innovative use of IT has never been greater, for organisations willing to integrate technology into their strategy and recognise the CIO’s pivotal role in helping the organisation through the reporting structure the potential rewards are immense. Who do you report to?

The PWC report can be accessed at:
http://www.pwc.com/us/en/advisory/2011-digital-iq-survey/index.jhtml

David Gwillim
Exploring the value of IT to organisations
email: david.gwillim@optusnet.com.au
blog: http://www.businessitvalue.blogspot.com/

Are standards destroying IT governance?

Fundamentally, governance is “the exercise of authority” (Dictionary.com), this is operationalised as who can make what decisions, also called ‘decision rights’. Through the allocation of ‘decision rights’ the directors/owners of a company exercise control (to the degree that they choose to) over an organisation (corporate governance). IT governance is essentially the same (being a subset of corporate governance) with a focus on the IT assets of the company.

Governance applies (with differing decision rights patterns) regardless of the organisational structure or objective. Governance exists in an organisation regardless of whether it is a tightly controlled, highly centralised company, a large bureaucracy or a loose alliance of semi-independent actors. Why then is governance and IT governance in particular considered a stifler of innovation, agility and new forms of organisation?

Perhaps it is because those on the IT governance gravy train have found value in systemising governance and IT governance in particular into a series of standards, processes and methodologies which an organisation ‘has to have’ to have good governance. ISO 38500 “Corporate Governance of Information Technology” was issued in 2010 based on the world’s first IT Governance standard AS8015 issued by Standards Australia in 2005. It contains six general principles for IT Governance which are intended as guide for organisations of decisions to consider. This however has become an umbrella standard and IT Governance has become (according to the influential IT Governance UK organisation) defined under the Calder-Moir framework as consisting of 6 exhaustive ISO standards and no less than 25 complex frameworks and methodologies. Just one of these frameworks is CoBIT which alone has over 300 ‘control points’ in order to manage an IT system. If implemented in its entirety the Calder-Moir framework would bury an organisation under a weight of process and policy that it would never recover from. No wonder managers and employees have negative views of IT governance.

It is time to return to the fundamentals of IT governance, not just to revive the efficiency of today’s organisations but so that it can play its rightful place in emerging forms of organisation that seek to avoid the bureaucratic and sole destroying impost of traditional command and control organisations. Governance is not the enemy.

David Gwillim
Exploring the value of IT to organisations

email: david.gwillim@optusnet.com.au

blog: http://www.businessitvalue.blogspot.com/

What would you advise someone who is starting their career in IT in 2013?

One of my assignments this year is to assist final year IT students at the University of Technology to prepare for a career in IT. It will include resume writing and interview techniques etc, but what are their career prospects?

Careers in IT in Australia have changed rapidly in the past decade, the opportunity to work in a hardcore research or software development company have always been small (some like Atlassian, Wisetech and  Canon’s CISRA provide career options), however the traditional IT organisation within non-IT businesses are facing the paradox of IT becoming infinitely more complex while being easier than ever to install and use allowing other business divisions to by-pass the internal IT department entirely, leading to considerable downsizing. Outsourcing (including cloud services) has greatly simplified the IT challenge within many organisations. There is currently an opportunity for a career in Australian IT services companies, this area has enjoyed rapid growth in recent years, however once organisations get comfortable with outsourcing, third party management and off-site storage of their data, the next logical step is to move it all offshore to the lowest cost provider, impacting Australian IT careers.

The greatest opportunity I see for today’s IT graduates is to identify a better application, system, process, web design, iPhone app, game etc and build their own business around it. The opportunities for IT entrepreneurs have never been greater, with the rapid pace of technology development the opportunity to leverage technology in new ways is vast. Those graduating today are ‘digital natives’ with an insight into IT and a relationship with technology that us old-timers cannot even imagine. The opportunities are endless and very exciting, today’s IT graduates can shape not only the future of IT but the world.

What would you say to today's IT graduates?

Santa Claus's key performance indicators

Santa Claus has the ultimate in seasonal businesses, in just one night he has to deliver the right toys to the right children to over 1.675 billion houses (based on an average of 4 occupants per house www.convert-to.com). So what performance metrics would Santa require? There are the obvious ones on Christmas Eve, such as the need visit 19,386 homes per second, with the sleigh travelling at an estimated 3,000 times the speed of sound (http://www.baltimoremd.com/humor/santaengineer.html). And the avoidance of rework, if the wrong present is delivered to a child. But what about other measures?


When I posed this question at a recent Christmas Party my fellow party-goers suggested the amount of alcohol Santa consumers over the evening could be a problem. Based on 30ml of alcoholic spirits such as whisky or gin left out at every 5th house Santa consumes roughly 10,000 litres of spirits on Christmas Eve! However the energy required to visit 19,386 homes per second probably requires that sort of energy input, indeed Santa may budget for a particular amount of drink and food being left out to keep himself and the reindeer fuelled up, with a disaster recovery plan at hand should the planned food and drink not be available.

Of course the ultimate measure of success for Santa is as many happy smiling children as possible. Santa's marketing department has the triple role of promoting the Santa brand, determining who gets what presents (what to produce) and also who is naughty and who is nice, hence the year-wide viral marketing campaign using parents to cajole there little darlings into behaving with the threat that if they do not behave they will be put on the naughty list and Santa will not visit them. Of course I trust that you have been good during the year and Santa will be visiting your house on Christmas Eve.

This blog will be having a short break over Christmas, back late January. If there is anything you would like to the blog to cover in 2012 let me know, it is sure to be a fabulous year. I wish you a happy and safe Christmas.

David Gwillim

Exploring the value of IT to organisations

email: david.gwillim@optusnet.com.au

blog: http://www.businessitvalue.blogspot.com/