The Curious Case of Benevolent CIO


The CIO (Chief Information office) or Head of IT is a very interesting role in an enterprise landscape, Having the opportunity of closely working with CIO’s, I have realized that Of all the CXO roles, (CFO, CHRO, CMO etc.), The CIO’s are the most benevolent when it comes to spending on technology to keep their own house (IT Function) in order.

The message is reinforced by all leading IT and management Analysts who call IT as Partner, Catalyst and hold it’s importance in driving organization change. This ensures that the CIO spends all of his time and budget in delivering world class processes and tools which help the Business/Sales and Marketing/Finance/HR and everyone else manage their KPI better.

At the time of annual budget, all business leaders lobby hard to ensure their automations are approved, many of them see automations as way to keep their teams happy and secured from becoming redundant. Business side automations continue to happen like this in name of productivity, compliance and growth.

Knowing this, technology vendors leave no stone unturned and send their army of sales teams to chase the business heads, completely ignoring the CIO on their way. The CIO who has often worked hard throughout the year optimising each and every dollar of IT budget. Once again falls victim to this new business requirement which is routed by business heads through the CEO/CFO.

So after business pushes new Adhoc spend in the Annual IT budget, hell breaks loose for the CIO, Who is now is asked to bring his IT budget in certain % of revenue.  The CFO (Influenced by Another vendor/consultant) pushes some difficult questions to CIO such as (How much percent of Network budget is consumed by Employees surfing Facebook/YouTube , What is the ROI of security application for which we paid a million dollars, How many employees are actually benefitting from the 100 Software licences we brought last year). Since a lot of spend on these was business driven, and all IT did was purchasing and provisioning, Our CIO is often caught with his neck deep in water.

The problem of measuring IT costs at an activity based level is much more challenging and requires complex alignment of Financial and IT Operations tools, all of which have to work in tight cohesion with various vendor products. There is a underlying hardware which could be on premise or hosted, There is the operating system, storage, middleware software, application software, security appliance, network gear and bandwidth, On top of that there is the project cost, support cost, training and change management costs. Moreover these discrete elements which make the Service Costing are spread across various cost centres and accounting policies, making the job of IT-Financial reporting on business benefits even more difficult.

Once again in absence of right tools to track IT-Financial costs and benefits, The CIO ends up getting arbitrary cuts in his budget. Starting the vicious circle of not having enough money to invest on his own IT.

In spite of all these challenges in measuring IT. The CIO is still responsible for managing all the complexity created around multiple technologies, platforms, and people (Internal and Outsourced). He has to ensure that all the IT enabled services are running and the promised projects are delivered within scope, time and cost. So while everyone’s life keeps getting better with enough IT tools to run their department, The CIO himself has little to depend upon.

 Value Chain of IT

A simplified view of IT Value Chain will show that a CIO needs to manage 3 core processes (Track Demand, Acquire or Develop IT and provide Maintenance and Support). Their core activities are then enabled by having aligned Enterprise Strategy, IT-Finance, and Procurement, Human Resources, Communication and Risk Management functions.

Unfortunately there is no mature and integrated solution which caters to all of this. The biggest of ERP and technology vendors (SAP, Oracle, Microsoft, IBM, CA, BMC, HP) have all good product roadmaps, however a robust solution still appears long away.

As of 2013 , The only logical solution seems to be using a “Necklace” approach wherein the middle diamond one can be a one of  (CA,HP,IBM,BMC) surrounded by SW pearls by (SAP-Solution Manager, Microsoft,Cisco,Symantec, etc). The common thread across them has to be a custom build BI with an actionable IT dashboard and workflows on top.

Such a project will require big pockets and will have difficult internal selling cycle as already IT for IT has often been most deprioritized IT spend. Moreover CEO/CFO who find difficult to justify IT cost to boards are unlikely to take this up unless they see this investment paying for itself in 12-24 months.

So with no real solution in sight, The CIO’s would continue to remain altruistic, With a wishful thinking that Benevolence will evolve into good relations with business teams, which would will pay for itself.




17 Responses to “The Curious Case of Benevolent CIO”

  1. Greg Goldasich says:

    I enjoyed reading your observations as they dovetail exactly with my experiences in IT management consulting. I was briefly thrown by your first paragraph phrasing of “…CIO’s are the most benevolent…” because it seemed to imply they generously spend on the tools of the IT trade. Reading further I was able to understand the focus was the consistent lack of focus on internal tools. In any event, this phenomena is exactly as you describe it; I would often refer to it as not providing shoes for the shoemaker’s children. IT organizations and their management teams have, as long as I can remember, been unable to develop and implement proper technologies for managing the business of IT. Clearly the common thread is the propensity to treat IT as a cost of business and not as a quality and productivity service provider.

    Regarding your comment about not having integrated tools: I’m afraid I’d have to disagree somewhat. Running an IT delivery business model should not be particularly challenging for any of the same toolsets used in running other business processes. My experience is that IT department managers are either unwilling or unable to commit the time and effort needed to establish the discipline needed to utilize these tools.

    In any event, I enjoyed your insights. Keep it up!

    Greg

  2. Ahmed Anwar says:

    Abhinav’s ‘Benevolent CIO’ can make for a classic case-study for IT-Governance and Enterprise Architecture (or lack thereof). One of the prime objectives of ITG is realisation of benefits from IT investments. If the management consultant speaking to business leaders does not understand the importance of IT, chances for ITG/EA in that organisation become lesser.

    A real life incident: In an enterprise of more than 5000 employees, a management consultant asked the CIO struggling with merely 30 people (who did everything in-house, including first level support): “Why do you need more people? After all, you are not a software company – IT is merely a support function”. This on top of the consultant’s proposal to increase response times and reduce delays/downtimes and reduce IT cost by proposals for a haircut!

    Perhaps, organisations postpone governance initiatives fearing the huge scope, size or cost of the project; but this will only worsen the situation.

  3. Charles Betz says:

    Abhinav, I agree with your article. You are describing the dynamics which many of us experience in the dysfunctional “business of IT.”

  4. Sukumar Daniel says:

    This is like asking if a CFO should invest in Financial Accounting Software

    • Abhinav Mittal says:

      The whole point is no one questions when the CFO needs Financial Accounting Software, However when the CIO needs his ERP, There is none available

  5. Ravi Kumar Karri says:

    I think it is a question of justification in terms of value. In the case of CFO, the regulatory implications being onerous stands out even more easily

  6. Sukumar Daniel says:

    I wonder why you say that no ERP is available for IT SMS, While it may be debated that ERP like SAP Finance is not Readily Available, there are quite a few applications that can do a fairly good job and I have personal experience in implementing these for customers and helping them to realise value.

    Having said the above, may be the real reason why these existing tools are not used to the extent of their capabilities is that the basic competency required for using these tools and the capability on the part of IT People to manage Services, instead of managing technologies is missing.

  7. Brian Luining says:

    Dear Abhinav,

    I don’t know many CIO’s who are really that much of a victim as you describe. However, a CIO should be a strong gate-keeper and protector of the IT Strategy and Governance. Even a CFO should not be able to just overthrow the IT balanced portfolio and execution, as it’s designed to support the Corporate Strategy.
    I do agree that are still a few C-level executives who think that Enterprise IT is as simple as their IT at home: “My 14-year old son upgraded our system within a day, let’s assume you are less skilled than he is, then you should still be able to do it within two weeks…”, after further analysis the complete upgrade exercise was estimated 60.000 man-hours (!) Hahaha…

  8. Bhabani Sahoo says:

    Enjoyed reading this article. Thanks for that. However, I agree with you upto a great degree. But I still feel that the success criteria (for CIO) can be improved by presenting the value realization to stakeholders appropriately. That’s why it is important to tie IT objective with business objective and use negotiation skill to justify and prove the point

  9. Philippe Ong Tone says:

    Interesting article. The only thing I would add is related to the 3 core processes being managed. I would add “Anticipate demand” to instead of only “track demand”. Thanks

  10. Ravi Shanker says:

    your article is excellent. I think it drives my point though. IT is seen as “not business”, and so the CIO is starved of budget. Once the individual business units understand – fundamentally – that they are dead in the water without IT, their budgets will automatically cover their IT needs, and they should start absorbing that IT function into their units. So, where does that leave the CIO?

    • Stephane Bouillon says:

      There’s no such thing as an IT project, only more or less IT intensive BUSINESS projects. Unless you are able to clearly identify why you’re doing something, who gets to benefit from it and what you need to do to realize that benefit, you have no objectivized way of prioritizing your projects. You may be doing all projects exactly right, but are you doing the right projects ? The moment that the value of governance becomes most apparent is when a decision on how to spend the IT budget has to be taken. This has to be a collaborative effort between IT an all business stakeholders. A governance board is the right forum for that discussion, with the CIO as a humble facilitator.

      • Ravi Shanker says:

        @Stephane, I agree with your first part, i.e., “There is no such thing as an IT project, only more or less IT intensive BUSINESS projects.” I think you nailed the issue on the head. IT is always a supporting role.

        IT, in the 21st century, is absolutely essential for an company’s very existence, leave alone profitability.

        However, IT, by itself is not useful. It is useful only in what it brings to the other parts of business – Sales, Marketing, Supply Chain, etc.

        Now, to your second part – you have implicitly assumed that IT should sit across the different stakeholders and figure out “something right”. I am not so sure that is even possible, let alone something that should be done.

        I think the IT needs of Supply Chain could be very different to those of Sales or Finance and vice versa.

  11. Mr. Mittal,

    I humbly disagree with your premise. Activity-based IT costing isn’t that difficult. It just isn’t done. The problem isn’t tools. It’s experience.

    Being the finance guy in an IT department has all the career cache of being the IT guy at the bank. That wry analogy is true as far as it goes, but it goes no farther. The latter is a sysadmin paid like a Wall Street pro. The former is a Wall Street pro paid like a sysadmin. The roll of IT budget analyst is often given to whomever in the CFO organization is viewed as most expendable. This person sits in the data center, is dotted-lined up to the CIO, but is still carried as a headquarters burden. It’s a precarious existence which nobody wants to assume.

    There are tools that can do the work. These chargeback packages, though, are rarely in place. At the back end, it means that metering has to be precise. This requires a great deal more maturation in IT service management than most enterprises — even the biggest — generally have. Then you need to spend the better part of a million dollars to buy the applications, install them, test them, run them in parallel with existing processes for a year, and hire someone to run it full-time going forward. This generates a series of invoices that, once they cross the line-of-business bosses’ desks, will have them screaming for your head on a pike. They were always under the impression IT was free.

    But you don’t need a tool. What I’ve done for numerous clients is a less formal, less rigorous “show back” system. True, it’s not as precise as a chargeback scheme, but if you can live with plus-or-minus 10 percent, it works OK. And all you need is an Excel spreadsheet, and one morning a month to update a sheet of highlighted cells. It’ll still generate those invoices, though, which means your head could still end up on a pike, so again it’s not worth anyone’s time.

    Activity-based costing, in short, is very do-able, but requires a change of behavior. It can be an instrument of that change, but not the prime mover.

    Warmest regards of the season,

    ~Bill~

    William Freedman
    http://thecasemaker.wordpress.com

  12. Silas Nashut says:

    Top technology priorities for organizations to invest heavily in include: cloud computing on-demand, Big Data stewardship and pay-as-you-go service models for eTransformation and IT Participation springing from massive, cumbersome, internal cost centers into agile, reactive external services that are used not merely as business tools, but also as the medium by which business is conducted for accelerated accomplishment through their enormous benefits.

  13. [...] The Curious Case of Benevolent COI [...]

  14. Franz Dill says:

    On the needs of the CIO. I say just often just making sense of data, process and business. to make them effectively work together.

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