Archive for the ‘The Bottom Line’ Category

So why do so many companies undertake a Merger or Aquistion without the CIO’s involvement?

August 20, 2010

Successful Mergers are difficult enough to pull off with the involvement of IT.  So why do so many companies undertake them without the CIO’s involvement? The CIO should be involved early on in any type of M&A undertaking.  Many of the proposed synergies and savings of the Merger can be squandered on inefficient and duplicate systems.  Thomas Wailgum wrote an excellent article to this point in CIO Magazine (February 18, 2010)—“M&A Mistake: Too Many CIOs Arrive Late to the Dance” – I recommend the read.

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Forrester Research Report: IT Chargebacks

July 28, 2010

A recent Forrester Research report details how with the ongoing economic condition, evolving service management processes and maturing tools in the market, CIOs are rethinking their position on charge backs. In the past, the technologies used to track IT services and the costs associated with them perhaps didn’t offer enough automation or proved to be cost-exorbitant. Now with added economic pressure and updated technologies from the likes of Apptio and HP, Forrester analysts say the best practice is garnering a second look from many IT executives.

Forrester had tracked since September 2008 inquiries around understanding IT services and found that 73% of some 30 requests focused on IT chargeback.

Nearly one out of four of these inquiries asks, “Why now – why has IT chargeback suddenly emerged as a strategic topic for CIOs and what are they doing about it?” Forrester’s report reads. “After years of either ignoring the need for IT chargeback or cruising along with the status quo, there is suddenly a renewed interest – in some cases, almost an imperative – to implement chargeback.”

IT charge back involves IT departments assigning a price to each service and billing departments for the services they consume. With such cost transparency, IT can prove its value to the business and show those it serves what their application or service demands ultimately cost the business, industry watchers say.

Forrester identified three drivers for the renewed interest in IT chargeback: the global economic recession, the inclusion of charge back processes in ITIL Version 3 and the availability of more mature tools. Still the reason that IT chargeback hasn’t seen wide adoption is because it’s not easy. It involves gathering data from several systems and developing a service catalog of sorts for IT.

“Providing this level of detail requires lots of information about costs, service performance and consumption, which in turn requires an automated approach,” according to Forrester analysts.

Forrester also identified the challenges organizations could face when adopting IT charge back. The research firm says IT shops will need to be able to assign financial value, or prices, to IT services that in the past had been offered seemingly for free or for one lump sum. This will require IT to organize services previously assigned to a specific domain in a more service-oriented fashion across, for instance, network, servers, storage and application groups. Reorganizing for service delivery will also require new roles such as service manager in many IT departments. “IT chargeback is fundamental to demand management and communicating ITs value proposition. There can be no more free lunch for IT customers, but at the same time, IT can no longer allocate IT costs as a lump sum,” the report concludes.

“Implementing IT cost transparency is no longer optional; it’s only a matter of when.”

Harnessing Social Media – A new market for the CIO

July 12, 2010

In my last blog posting I spoke about how CIOs need to focus more on revenue generation than cost cutting. In this post I want to talk a little about how CIOs need to embrace social media and find ways to access new markets for their organizations through social media channels.  A study produced by the International Center for Media and the Public Agenda (ICMPA) at the University of Maryland sheds some light on this elusive topic.

The study concluded that American college students are social media addicts (tethered a Blackberry, iPhone, computer laptop, television, and iPods, etc.). When they were cut off from using social media for just 24 hours, students described having symptoms associated with drug and alcohol addiction: In withdrawal, frantically craving, very anxious, extremely antsy, miserable, jittery, crazy. They reported feeling unconnected, even to those close by, according to the study. The study found that they were most discomfited by their lack of access to text messaging, phone calling, instant messaging, emailing and Facebook–their primary means of connecting to friends and family.

“We were surprised by how many students admitted they were ‘incredibly addicted’ to media,” noted project director Susan D. Moeller, a journalism professor at the University of Maryland and the ICMPA’s director. “But we noticed that what they wrote at length about was how they hated losing their personal connections. Going without media meant, in their world, going without their friends and family.”

The students also felt extreme anxiety about being cut off from information. Specifically, they worried about having less information than their friends, on everything from sports scores and TV shows to news about their classes and world events. In fact, it seems that the way students learn about news events is almost entirely through the prism of social media. Very few reported that they ever watched TV news or listened to radio news or read a local or national newspaper. “Yet student after student demonstrated knowledge of specific news stories,” the study’s authors wrote. “The young adults in this study appeared to be oblivious to branded news and information. For most of the students reporting in this study, information of all kinds comes in an undifferentiated wave to them via social media. If a bit of information rises to a level of interest, the student will pursue it, but often by following the story via unconventional outlets such as through text messages, their email accounts, Facebook or Twitter.” This indicates that to this group news is not something impersonal, but that it comes to you through your base of friends (filtered and biased by their views) and therefore makes the information much more personal.

The study’s findings have major implications for all CIOs. Companies spend millions on advertising and sales to promote their products and services. Never in the history of technology has there been such an opportunity to transform how revenue and sales are generated than by specifically targeting a product or service directly to an individual via a social-media means.  This  “New Holy Grail” is about our new ability to target a specific message to an individual that will cause that individual to produce a desire result.

Radio, Television, and the World Wide Web cannot do what social-media has the promise to do. Organizations need to start planning now on how to harness this new means of marketing and advertising.  A CIO’s challenge will be to build systems for marketing and advertising purposes that can identify this targeted individual and deliver a concise message to them.

Technology + revenue generation and focus on customers, not cost-cuts

July 8, 2010

CIOs in the retailing sector have had a pretty rough go of it over the last several years. But according to the 2010 Global Retail CIO Survey, cost-cutting is now taking a back seat to finding ways technology can help boost revenue.

Retail CIOs are looking to boost revenue via automatic replenishment, demand forecasting, enhanced promotional effectiveness, and Web-based sales channels, a new study says. Plus the fact that 26% expect IT budgets to go up as a percentage of sales, while 51% expect them to hold steady.

And while the study focused on CIOs in the retail industry, its underlying results are important for CIOs in all markets because they reveal the forward-looking perspective CIOs must keep these days in spite of global economic gloominess. In particular, this excerpt from the study’s introduction powerfully captures the wrenching changes and challenges all CIOs  face today, regardless of industry:

“It’s important to recognize that today’s retail model is, largely, a system built for the realities of an earlier era — a linear, push-based process where products are manufactured in isolation and put into market en masse from factory to truck to store, for customers who do the majority of their shopping in suburban malls. This approach was well-suited to the needs of manufacturers, retailers, and consumers half a century ago. But today, this system is straining to adapt to global supply chains, new ways and venues for selling — both physical and virtual — and a very different kind of consumer.[Today, retailers and manufacturers need a system] “… that can be fed by customer insight at every point in the process — all the way from design to distribution. It needs to be instrumented, so every item of inventory can be tracked and accounted for. And it needs to be intelligent, so vast amounts of customer data can be analyzed and turned into real data in real-time. By building intelligence into our entire retail system, retailers, manufacturers, and suppliers can eliminate inefficiency and waste at every step of the chain — crucial in the current economic downturn. Even more important, retailers can serve the new breed of empowered consumer, whose needs for high value, individual service, and low prices will only grow.”

The challenges faced by Retailing CIO’s are the same for any CIO in any industry, only the terminology is different.  More-informed customers, outmoded and limited capabilities throughout the supply chain, and creaky processes incapable of handling the demands of “the new breed of empowered” customers — these are significant issues for all CIOs.

Continual cost-cutting is not a sustainable strategy.  The focus today needs to be on revenue generation through the eyes of the customer.