Chief Integrity Officer

He tracks the movers and shakers in the industry and selectively distributes the messages to some of the CIOs in his inner circle. Some send him news while he gets most of it from his ferrets and in almost all cases it is “Breaking news”. So his messages and conversations are always engaging and we look forward to these intermittent connects. So when I received a text message from him the other day that a CIO of a renowned enterprise has been summarily fired for breach of business ethics, I was aghast !

In a majority of organizations the CIO has direct responsibility and power over the budget spends. For large enterprises the value is quite substantial which brings in all kinds of vendors and service providers flocking to get a slice of the proverbial pie. The sense of power being obvious, many CIOs relish the hold on vendors and use it to the benefit of the company by bringing in lower prices, volume discounts or benefits as a first mover and adopter of technology. Month, quarter, and year-end target pressures are known and used both ways.

Governance in some companies requires the selection of technology and negotiations to be separate and allowed to operate independent of each other. IT organizations thus evaluate the hardware, solutions or services on their merit and specialist IT buyers take part in the financial transaction. These work well when the IT buyer is well connected to the market, goes to the same IT conferences as the IT organization and understands the rationale behind the decisions such that s/he will not force the CIO to go with the lowest cost.

Another set of companies vest the responsibility with central purchase organizations that over a period of time do learn the ropes but may be disconnected from the dynamism of the industry. Here the discussion is largely about getting the lowest price with limited benchmark information. In many cases they end up leaving margin on the table or creating a win-lose situation by squeezing even after the last drop has fallen. There are anecdotes of some individuals in purchase organizations wanting undue favors.

Temptation comes in many ways even to IT teams and CIOs who wield power over the selection and final TCO of the solution. A freebie here and there, goodies and occasion based presents are normally not frowned upon; the bolder ones offer and demand high value stuff for aspirational personal consumption. The brazen build in their commissions into the deal which may be taken in cash or kind. Earlier perception was that this malaise did not exist in professional organizations; the myth was broken many decades back.

I came across the first instance of such an incident before the turn of the millennium and felt sad for the CIO considering he was just a few years from retirement. Over the years intermittently news continued to come; a couple of them were repeat offenders. Quite surprisingly they quickly resurfaced in new assignments even when they exited abruptly. I wondered how they continue to blatantly engage in such behaviors and despite getting caught have no fear. How did they get sound sleep ?

Discussing with a few friends the answer was quite obvious; in all the cases the news never got out. The company never acknowledging the fraud or financial irregularities; they kept it under wraps. The person thus was free to go and join another company to repeat the same which many did. The impacted company tightened controls, made governance process a lot more rigorous or shifted the responsibility out of IT. The new company was clueless on the integrity of the hire as reference checks are rarely done with past employers.

For victim companies their faith in the IT organization stands shaken, the news spreads in hushed tones and the saga continues. Greed has no limits nor any preferences; the integrity of the person comes out of his/her foundation of core values. There will be temptations thrown at you by incorrigible vendors; if you don’t take the bait, they may approach others in the company. Be aware and be open, raise these internally if they impact you. After all you are responsible for your integrity; the I in CIO stands for integrity always.

Integrated Best of Breed

Big fish gobbling up the smaller ones has been a natural way of life. Recent times have seen many startup and small-medium technology companies being acquired by their larger brethren as the biggies try to fill voids in their enterprise solution offering or expand their footprint in corporate IT. Innovative ideas and niche solutions have found it easier to expand their market aligning with the big companies while in many cases it was also about survival or the investors cashing out too.

Meeting up with few large enterprise and conglomerate CIOs the discussion veered towards how they are staying ahead of the pressures to continuously adapt to changing paradigms and ensure that the IT architecture stays agile and in sync with business. Everyone had gone down the path of implementing the monolithic ERP, CRM, SCM, … solutions more than a decade back. With (in)organic and global growth the footprint continued to expand moving from single instance to multiple and then back to consolidated deployment.

Depending on the evolution of solutions and enterprise need many CIOs took a call to implement the complete suite of functionality from one vendor; then there were few who decided that they will not compromise on business requirements and find the best fit for what their business needs. Integration as required was addressed using Enterprise Application Integration (EAI) tools which had evolved to allow coexistence of legacy and new systems. The resultant technology diversity did pose challenges for IT which was deemed acceptable.

Staying with one solution provider did have advantages of better integration over the other though not by a huge margin as most large vendors had acquired other companies to fill in gaps in their offerings. Some of the best of breed now became offerings from the same large vendor with support prices almost always going north busting budgets and taking away fiscal benefit which the smaller vendors had offered. CIOs had little choice but to fight tooth and nail to get marginal benefit eventually accepting the new terms.

M&A in the IT solutions industry keeps changing the landscape. While the acquirer in most cases buys to add missing functionality or to get ahead of competitors, there have also been a few to kill a smaller or dominant player in a specific segment. There have been many such acquisitions over the last decade where the solution became irrelevant and by the time it revived itself, the market had changed. This is very evident in customer management and supply chain solutions in which earlier leaders failed to regain their market leading positions.

With new technology and disruptive paradigms driven by consumerization and services on demand being touted as nemesis of conventional IT organizations, solution providers are joining the bandwagon in an attempt to brick-wall their customers. We can offer you the option of cloud, stay with us; list prices are only for small customers, we will give you good ROI on either stack. CIO buying from startups soon discovers that the solution is now with a vendor who they may have rejected in their larger evaluation.

With integration becoming easier over the years across “commercial off the shelf” and cloud solutions, the new wave belongs to point solutions for specific tasks and functions. Almost all of them provide ready connectors to legacy ERP solutions thus eliminating the earlier pain of integration. Today CIOs can exercise a choice along with business to find the best fit for which there are alternatives as compared to the past. And the discussions between best of breed and integrated is no longer relevant.

Predictions about the demise of the larger solutions have been around for a while now; I do not believe that they are going away in a hurry, rather many have adapted to the new situation quite well. The momentum from new and micro solutions will keep everyone on their toes. Acquisitions will continue to change the landscape and the CIO will have to continuously adapt. Business will want agility and legacy will remain entrenched. The future will be uncertain, that is certain. All in a days’ job for the CIO !