Part Two of a roundtable conversation with Enterpriser CIOs and CIO Magazine.
- Tom Soderstrom, Chief Technology Officer, Office of the CIO, JPL
- Merv Tarde, VP of IT, CIO, Interstate Batteries
- Cliff Tamplin, VP of Technology Support & Risk Management, Hyatt
- Adam Dennison, Publisher, CIO
Introduction
The following is the second article in a two-part except from a recent roundtable conducted by The Enterprisers Project. Here, we discuss the current in-between state of many IT executives—those caught between strategic leadership and merely executing on someone else’s plans—and suggest possible solutions to bring them fully into the business conversation.
On Thriving with a Flat IT Budget
The Enterprisers Project: A lot of what comes through in the recent survey and in the 2013 State of the CIO report is that budgets are flat or being cut but at the same time you’re being asked to be strategic. Is there a way you can cut costs strategically and grow with a flat budget?
Tom Soderstrom: The simple answer is, absolutely. The more difficult answer is how to do it. There is a lot of implication of effort, where “effort” is either creating something new or maintaining something old. Perhaps you have a dozen action tracking systems, but how do you shut one down? You could save license costs and maintenance labor, but if an influencer on the business side is in love with his or her own system, shutting it down will meet resistance. On the other hand, if you created a relationships where you can innovate together on the next thing, and you can measure how much you would save if you shut the old ones down, you could together get the budget for the new and shut down the old. That’s one way.
A related way is to consult with the business and ask them how can we help them save money -- and that’s a welcome conversation. It doesn’t have to be large; it just has to be compelling. And if we do these low-cost projects for the businesses, they will like them because it’s their ideas, they are the leaders, and the prototypes were fairly inexpensive and quick to start with. The early users can become the initial support tier, which means we don’t need to spin up the whole help desk around it. If we get a lot of positive feedback, we will get a budget for a larger implementation, and roll it out to the rest of the businesses in a larger fashion. An additional benefit is that the early business adopters now double as IT leaders. This is also a way to gradually build an effective architecture, as we can ensure that these prototypes fit into the target architecture, and part of that is shutting down duplicate systems.
Cliff Tamplin: I thoroughly agree that if you haven’t got a plan at least for the big picture, how it all fits together, you’re in a fragmented environment. One of the things that I think is pretty important is the whole concept of a data architecture because again with all these things popping up all over the place, it’s harder to approach the concept of master data management. The classic case of that being “What’s a customer?” If that piece of the architecture is not in place so that the different groups that are rapidly spinning out new systems and building or buying solutions, if they don’t all try and connect, it makes life challenging, to put it politely.
Merv Tarde: With our architecture, we make sure that we try to abide to the architecture that we have unless we are modifying or enhancing some legacy system that we had, but we’ve been fortunate lately. We have been retiring quite a few, which has helped in terms of reducing some of those expenses. We have to do a lot better at that too.
Tom Soderstrom: Another way to measurably save money is to use the cloud. We use cloud computing heavily for the right things, prototyping being an example where we can do that very rapidly. If it looks like the prototype has merit, we can move it to whatever environment we want. If it doesn’t, we just shut it off and stop paying for compute time. The cloud can help us move more quickly and can save a lot of money, even on operational things. It’s arguable how much it saves for a legacy large application, but we’re moving in that direction. We just haven’t started moving those yet because our legacy environment tends to be well optimized.
Merv Tarde: One of the things we just started within the last couple of months with our new CEO is going through and looking at every initiative that we have on the plate, IT project or non-IT, as long as it takes resources and money to do them. As a group we’re laying them all out on the board and we are prioritizing them and, in a lot of cases, basically saying “not now” so we move them to a ‘delay’ or an ‘ignore’ category, and as we get more cycles on that I think that is going to save us a lot. And we’ll be more focused on the right things, whether it’s reducing expenses or increasing revenue, so I think that will help in the Op-Ex area.
TEP: Sounds a little bit like the Seven Habits of Successful People. You move the stuff you can safely ignore off to the side and don’t devote energy to it.
Merv Tarde: Right. Now we’re really focusing on a few things and putting them at a high priority and we all agree, every one of the officers, that if a project comes along that needs resources and it’s one of those high-priority projects, you are allowed to bump and delay something else that’s in progress.
Tom Soderstrom: Does that work across departments? Do you do that collaboratively or are people just bumping within their own sphere?
Merv Tarde: It’s done collaboratively, all the way down to the senior manager level. In IT I have a monthly team meeting so I get the entire IT organization together and we go through what we’ve done in terms of starting up new projects and also delaying some, and what we’ve implemented to make sure that everybody, whether they were involved or not, knows what’s going on within IT and the business. Since we’re mostly centralized with our headquarters, we take everybody to an adjacent hotel and a banquet room a couple of times a year, and we go over all of our business plans and how we’re achieving them and, in some cases, how we’re behind. So, we try to make sure that we communicate as well as possible.
CEO or Line of Business: Who Better Enables the CIO as a Strategist?
TEP: The second topic we wanted to touch on today came up in conversation with a CEO in Chicago recently. He said if you want to get something done, if you want to sell a project through, if you want to get it funded, and by extension to become a better business strategist because you’re more enmeshed with those issues, it’s more important for the CIO to be close to line of business leader. So we wondered, are there any cases where you’ve gone to line of business leaders with technology ideas that were going to solve problems and were able to sell it through, and have you had better luck doing that with your CEO?
Tom Soderstrom: We’ve started with both the CEO and line of business leader and both work. In my opinion, it works much faster if you go to the CEO first. If you start with the line of business leader and the CEO disagrees the interest will wane quickly. But if you start with the CEO and get a good response, the CEO will talk with the line of business leader and say, “Here’s something that you will find interesting.” Because the IT leader and the business leader are now working on an initiative that has the CEO’s attention, it maximizes your chance of success. So, if we had to choose, I would start with the CEO.
Merv Tarde: I’ve done it both ways, but mostly I do it through line of business and make sure that we’re well aligned, that we have good relationships. Then again, the CEO and I probably get together at least a couple of times a month, so we see a lot of each other.
Cliff Tamplin: I’m going to use that consultant voice again: It depends on what the thing is. We tend to be a pretty collaborative organization, so if something comes down from the CEO, then it may well be resisted. Most of the time it tends to be far better if you’ve got groundswell and got everybody aligned so that there’s more support for whatever’s going on.
TEP: In that spirit, here’s a bonus question. You look at your calendar, realize you’re double booked, and that you can take a one-hour meeting with the most profitable line of business leader or with the CEO to talk about where the whole enterprise is going. Which meeting do you go to, and which one do you reschedule?
Merv Tarde: That’s super easy. It’s pretty much the CEO first and then the other guys have to wait.
Tom Soderstrom: I agree.
Cliff Tamplin: Yeah, it would be, I think, a very brave individual, who would decline the CEO.
Tom Soderstrom: One interesting twist is to invite the line of business leaders to your meeting with the CEO, with the permission of the CEO. That would be a way to kick-start that project.
TEP: And do you all think you’ll be working as a direct report of the CEO in five years?
Tom Soderstrom: I think the CIO will report to the CEO because the trend is that the CIO will understand the business in depth, become a strategic part of the business, and will take on business growth or revenue-producing projects.
Merv Tarde: I think that I’ll still be reporting to the CEO, and I have been for eight years.
Cliff Tamplin: It seems like we’ve bounced around. We started with the CMO, then the CFO, and now IT reports to the president of the global shared service, which includes HR, Finance, and Property Development. I think as long as IT and the CIO have report to a role that spans all of the powers, I don’t think it matters. I think at most companies that will be the CEO because there’s no part of an organization that isn’t dependent upon information going forward.
TEP: Adam, are you surprised at everyone answering CEO, given that there’s a lot stuff in the press about the CIO having a smaller IT budget than the CMO by 2017 and so on?
Adam Dennison: I’m not at all surprised. Our statistics have held true on that for ten years plus. We did see a little jump up on CFO, but now it’s back in line. The CEO is number one, CFO is number two, COO is number three, and CMO is not even on the radar. CMOs don’t care about integration issues, they don’t care about security issues, they don’t understand the architecture; they don’t understand vendor management. They might have budgets, but they’re still very much in need of the CIO’s support, guidance, approval, and delivery. I don’t think CMOs would know what to do with that organization. That’s my humble opinion.
