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October 2011 - Posts

Changing role of the CIO

Published: October 25 2011, 05:48 PM | no comments
by Robert Stroud

It is happening. IT is being delivered to and consumed within the enterprise without IT's knowledge. The cycle started with outsourcing and has rapidly accelerated with the advent of cloud computing.

When speaking to an employee at a large financial organization last year, he told me that part of the business was no longer relying on an internal IT to provision and deliver technology. In many organizations, technologies like social, mobile, cloud, direct outsourcing contracts and video are being leveraged to bypass the IT function. Consumers of technology today are extremely "tech-savvy" and expect information in real time, personalized user experiences and access to mobile applications.

Data center functions are being outsourced for cost efficiencies and to enhance time to value.

Is this the end for the CIO, and Information Technology, or simply another page in the evolution of IT enabled business service? I spoke to the CIO of another organization in the finance industry recently and his reaction to these industry changes has been to leverage the potential risks and compliance requirements to "shut the door" to all uses of cloud and outsourcing. Ultimately he found out it is happening behind their backs.

The "cloud computing revolution" is a continuation of the evolution of computing.  The reality is that the CIO and IT will need to make the concession that total control, perceived or real, will be lost and their role will transform.

Forward thinking organizations and CIO's have leveraged this transformation to commence a transformation of their own as they look to become part of the innovation process and accept the role of the aggregator of services - aka a service broker. This involves the acceptance of the disruptive technologies that fuel the business, partnering closely with the business to drive growth and customer engagement and implementing a new management paradigm.

The changing management paradigm IT will provide value through effective management of the portfolio, sound financial management and effective sourcing and management of the vendors delivering the capabilities all with the view of not only sustaining, but also delivering rapid innovation.

As technology sourcing and consumption moves beyond the CIO, the role of effective management must be the primary way in which the CIO will provide the appropriate level of centralized coordination. That said, the CIO will remain responsible for the orchestrating technology sourcing and managing the supply but at the same time facilitating the delivery of innovation.  To do this the CIO's focus will shift to empowering employee's and customers to solve problems and IT will need to focus on relationships with the business and function as a trusted advisor to assist them in solving business problems. In short, IT will need to ensure that employee's become one of the primary sources of innovation and blockbuster ideas to gain competitive advantage.

It is clear that IT is at the beginning of a major transition and change is inevitable, how will your organization deal with this?

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By: Robert Stroud
Robert Stroud serves as VP and as Service Management, Cloud Computing and Governance Evangelist at CA Technologies. Robert also serves as an International vice president of ISACA, is part of the Framework committee and was the former chair of the COBIT Steering Committee. Robert also serves on the itSMF...
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Using financial management for effective sourcing

Published: October 22 2011, 09:24 PM | no comments
by Robert Stroud

Financials are a topic on the mind of every CIO, whether they are getting pressure to justify or reduce spend or simply make a decision between sourcing options. Of late, I am hearing the age old argument that IT is too expensive. With greater analysis the fundamental issue is that organizations, although doing a great job of financial accounting with new projects, lose visibility once IT enabled business change is migrated into production.

Many organizations today cannot give an accounting of where the money is going in terms of business capability and value. This leads to an inability for IT to explain the value of IT to the lines of business. The outcome is that this lack of visibility leads to the perception that IT can be delivered cheaper and certainly faster.

In short, CIO's must prove they can plan, budget, manage, and control the total IT budget

Recently speaking with the CIO of a global financial organization, he told me that the IT budget increase he was given this year has already been eroded by a demand for a 10 percent cut. Even with all the efficiencies gained with automation, rationalization of systems and the application rationalization exercise currently underway, there is little low hanging fruit to cut. The decision for the CIO was simple he needed to implement transparency of consumed services back to the business to allow the business to determine either where the additional cost savings should be made, or, where the business should provide additional funding to IT.

Attending a conference recently in the UK, I heard a speaker from the UK government who identified that they had saved 24 million pounds in the first year of implementing a process of "showback" of service costs, simply by making costs visible.

Demonstration of effective cost management is one phase of the process and provides a baseline and communicates that consumption equates to cost.  Phase 2 must be transparency in sourcing allowing for cost effective sourcing decisions.  The challenge here is that the demand of IT capability is never linear and the industry trend will be to outsource infrastructure while IT focuses of value-add.

In order to drive pro-active value, the enterprise of tomorrow must provide additional capability for the consumer of IT-enabled business capability to determine what they will consume, at what service level and at what price. To deliver this capability, the IT organization will need to provide transparency to the business in the sourcing choices. In the future the business may indeed make its own choices, fundamental change and challenge the IT organization. 

In summary, step one is to identify the cost of IT services and communicate it to allow the business to determine the value of the services. After these costs are have been communicated, IT needs to focus on vendor and supplier management and the associated capabilities. An regime of effective sourcing decisions will allow effective financial decisions to be made, which is a critical component as IT migrates to the role of a service broker.

Balance Sheet image used under Creative Commons License courtesy of s_falkow.

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By: Robert Stroud
Robert Stroud serves as VP and as Service Management, Cloud Computing and Governance Evangelist at CA Technologies. Robert also serves as an International vice president of ISACA, is part of the Framework committee and was the former chair of the COBIT Steering Committee. Robert also serves on the itSMF...
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A geek, my iPad and delighting customers

Published: October 17 2011, 10:52 AM | no comments
by Robert Stroud

Being the technology geek that I pretend to be I upgraded my iPhone and iPad immediately when IOS 5 came out last week. I couldn't wait to get to the new features, such as messaging for free to my iPhone and iPad buddies.  I also found that taking photos with the volume button is more user friendly, and that reminded me of how important the user interface and "ease of use" is to the development requirements - requirements that often come from customer input.

When recently talking to a close CIO friend, he reinforced that user-driven requirements have become pivotal to driving what he now calls "IT enabled business capability." He said most of his requirements come directly from the business users which are correlated and reviewed weekly by a panel of representatives who prioritize them for consideration. Now you might think that this leads to a gigantic list, but interestingly the organization has found that typically 80% of the suggestions fall into the top 5 ideas, and suggestions come with an estimate of how much money can be saved or more importantly made.

I was in a convenience store recently and the store owner had placed an iPad in the corner of the store with an APP customers could use to interface with the store owner over services he should offer. Being agile, the store owner took the input, correlated the ideas and added several new profitable lines and also got feedback on services not required (although good sales analysis should provide that). The first idea was to provide the APP for use outside the store, and it's now a work in progress. The second idea offered a better manner to secure the in-store iPad, and that was immediately implemented.  The voice of the customer is being heard and as the owner has seen, his revenue and repeat customers are on the increase.

Now the secret sauce here is that in order to show value, we as IT professionals must change our cadence of long, lengthy development lifecycles to short, sharp, rapid and frequent releases that add business value to the consumer and allow them to see the regular progress is being made. This reinforces that we are listening to the voice of customer.

A little like the suggestion box of old (except not used for gum disposal), mining the fertile imaginations of consumers and acting on them quickly should be business as usual now.

Well, it's back to my iPhone now to see what new features I can uncover and leverage for better productivity!

Suggestion Box image used under Creative Commons License courtesy of Suggestion Box.

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By: Robert Stroud
Robert Stroud serves as VP and as Service Management, Cloud Computing and Governance Evangelist at CA Technologies. Robert also serves as an International vice president of ISACA, is part of the Framework committee and was the former chair of the COBIT Steering Committee. Robert also serves on the itSMF...
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A burger, a restaurant and cooking at home – which one offers the most value?

Published: October 13 2011, 07:23 AM | 1 Comment(s)
by Robert Stroud

"Cut your costs!" This is the familiar cry we hear too often. One of the fundamental issues that CIO's currently have is their ability to communicate their current costs to assist them in communicating value back to the business. Costs and their communication are a fundamental component of value as documented in Monday's blog "Before you can determine value, you need to know the cost?". The challenge for many CIO's is that their customers have no idea the cost of IT services and their attitude is often, "whatever the cost, it's too much."  Last week for instance I didn't want the hassle of buying the ingredients let alone the hassle of cooking so I visited the local Ribs restaurant for a meal. After a week on the road the last thing I wanted was yet another meal out, but I went anyway. As I looked through the menu I identified that the cost of several items looked significantly less than if I had cooked the meal at home, and I wondered how they do it.  Then when I got the check and saw the addition of the sales tax and the tip, the meal was significantly more than I believe I could have done at home, but there was perceived value and a variety of options that required skills I didn't have in order to make at home.  

Value then is not just a cost question, although cost is a fundamental contributor. For value to be perceived the service (or ribs) must be desired and the desire must be fulfilled within a timely manner to the level satisfaction with the consumer.

In this age of consumer driven IT, it is critical that IT effectively identify and manage demand. This doesn't require IT to necessarily fill all demand. IT needs to balance demand and supply and clearly define where it can add value to the organization and where it should be the broker for service and where it should defer to the business to make its own decisions. For instance there is a growing trend to Bring Your Own Technology (BYOT) where the team member will purchase and manage their own device such as a Tablet, Notebook or Smartphone and the Information Technology organization manages access to, and the use of the corporations most valuable asset, information.

Like my meal, value is made up of multiple components but without the cost being derived it is almost impossible to prove any value.

For me its off to the cafeteria for some red hot Chili!

Dollar Sign image used under Creative Commons License courtesy of Leo Reynolds.

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By: Robert Stroud
Robert Stroud serves as VP and as Service Management, Cloud Computing and Governance Evangelist at CA Technologies. Robert also serves as an International vice president of ISACA, is part of the Framework committee and was the former chair of the COBIT Steering Committee. Robert also serves on the itSMF...
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Before you can determine value, you need to know the cost?

Published: October 10 2011, 05:02 PM | 1 Comment(s)
by Robert Stroud

Have you ever had a situation where you are developing a time sensitive deliverable which you complete with moments to spare, only to realize that your tethering connection via the iPhone is not working and you need internet access?  You look for a wireless network, find it and 20 pounds later, well - you guessed it. I became the proud owner of 24 hours of internet access.  Now you might think this isn't a good value based on the fact that access can often be obtained at a lower price, but given the deadline and the criticality of the deliverable, this purchase was of exceptional value to me.

The same is true when you go for a meal, you don't expect to get it for free. You make a value decision based on your circumstances including your appetite, where you are, who you are with, your budget, time of time day, and your dietary requirements. All these elements drive a decision as to whether the price represents value.  For instance, if I need a quick snack and coffee, $8 at the coffee place might be fine and seen as a good value. Or if I'm attempting to impress a special person, then much, much more is probably going to be acceptable and still be seen as a good value.  In short, you don't expect the cost to be zero, but the cost will influence your value perception.

So turning to IT, if the cost of IT is zero, more than likely the perceived value is zero.

I like the ISACA definition of Value found on the ISACA website,

"The relative worth or importance of an investment for an organization,
as perceived by its key stakeholders, expressed as total life cycle benefits
net of related costs, adjusted for risk and (in the case of financial value)
the time value of money.[1]"

One of the primary challenges is to develop an effective cost model that identifies the cost of IT-enabled business services in terms that the business understands. These costs need to be linked to business metrics that make sense. For instance when you buy your hamburger it's not just the cost; there also are perceived service, quality levels and hygiene levels.  Now all of this is great but if you don't expose the cost to the business how do you transform behaviors in terms of consumption?

The value of communication of costs was reinforced by a speaker from one of the United Kingdom government departments during the recent Gartner ITAM and IT Financial management event in London. With basic communications of costs, which they call "showback," they have saved 24 million pounds in the first year with more to come as they mature their implementation.

Saving money to invest elsewhere is a strong objective. The real value for IT can be achieved if it drives financial transparency into the decision making process for sourcing solutions - especially with the cloud and outsourced services being leveraged to meet business expectations.  Imagine for a moment that as you consider a new IT-enabled business service, you are able to make sourcing comparisons of in-house, outsourced, cloud or some combination thereof in real time to reach your decision. This is the destination in the journey and to commence the journey starts with an understanding of your cost basis - more on that in the next few days!

[1] ISACA Glossary of terms

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By: Robert Stroud
Robert Stroud serves as VP and as Service Management, Cloud Computing and Governance Evangelist at CA Technologies. Robert also serves as an International vice president of ISACA, is part of the Framework committee and was the former chair of the COBIT Steering Committee. Robert also serves on the itSMF...
Read More..

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