Monday, December 21, 2009

The Art of creating IT budgets

Budgeting starts around this time of the year for most CIOs, along with the exercise of defining operations cost and investments for the coming year. This process typically lasts from four weeks for the agile to four months (in some cases). Almost every year, there is an expectation to do more with less, until you reach a scenario where “there is no more left to do more with”. During this time of the year, the CFO is at his peak of influence, since all the other functions which want funds try the level best to justify their investments and plans.

Recently, I was asked to present to a group of CIOs on “How to make your CFO your best friend”. Such a subject can be a hair-raising experience for most seasoned players, as it requires a strong financial background and understanding of the business to put across acceptable metrics and KPIs for the management team. This is where a skilled CIO can get budgets approved without the proverbial scissor’s side effects — it’s possible to avoid typical across the board budget slashes (of, say 20%), especially on the operational side of things.

Long time back, I decided to separate the operational budget and the investment (read capital expense) budget. My intention was to let the business decide the projects that they wanted to invest in. This ensured that business created the P&L for their projects.

Obviously, IT had to help the business with the figures and merits of each solution. In most cases, business would choose the best possible solution and succeed in justifying them to the CFO and CEO. This shift signifies that we will help implement and execute the project from an IT perspective, but you (business) own it. Many cases required the creation of innovative KPIs rather than the conventional ROI or IRR models to help the business justify its investments.
While setting the operational budget is relatively easy, the expectation to reduce budgets year on year remains an interesting discussion. In one of the cases, I took a menu card approach to operating expenses. If you want good speed of response from your network, you have to pay higher, like a toll paid to travel faster. Hardware refresh can be analogous to replacing cars every five years, a common corporate practice. Why? Mainly since the cost of maintenance goes up, and availability of spare parts is also an issue.

It’s possible to have the CFO as an ally, if the CIO understands the compulsions and metrics that the CFO has to manage. After all, CIOs are also responsible for managing the cash flow and acting as conscience keepers for the company.

Monday, December 14, 2009

Role of a CIO

In an recent event, a CEO raised the multi-million dollar question "What is the role of a CIO" which was a question posed to a gathering of CIOs. But in a social event, I got introduced to a new-age professional — one who hobnobs with CEOs and Boards, all the while talking about environment changes and the resultant impact on future climatic conditions. With Copenhagen in the news, I was interested in getting her perspectives on Green IT. Post the introductions and a bit of discussion about carbon credits, she innocuously asked me the question, “What does a CIO do?”

I was taken aback, aghast, and speechless for a few moments. Seeing my face, she quickly added, “Sorry, I have not come across CIOs in the past.”

And they talk about CIOs driving their companies’ Green agenda!

So I tried to give her some answers based on commonly accepted definitions and job descriptions loved by CIOs and executive search companies. She listened attentively as I started my discourse on the strategic nature of a CIO’s position and how the role has evolved over a period of time to now being recognized as an integral part of the C-suite. However, it was obvious after a few minutes that she was just being polite. She had no interest in the wonderful stuff that CIOs do — at least, not in what CIOs believe is wonderful.

The fundamental question nagged me for a few days after this fateful meeting. So I started asking a few peers that question —without exception, everyone wondered if I needed to visit a Psychiatrist. The more I thought about it, the more it haunted me. My Eureka moment arrived, by chance, while reading “The Whole New Mind” by Daniel Pink.

CIOs are left-brained people pushed towards right-brained activities and they face a constant struggle. The CIO’s role involves a transformation from being the glass-house’s keeper. He has to mold himself to becoming worthy of the oak desk corner office and a seat on the management table. For most CIOs, this has been made possible by successfully traversing the path from being a technology person to a well-rounded professional. He has to be the person who is equally at ease with techie stuff, as well as balance sheets and customer engagements. The CIO is unique in his ability to contribute to all segments of the enterprise.

Now, that’s an unusual way to describe a CIO. But to me, it’s a very satisfying definition of a continuously evolving role.

Monday, December 07, 2009

How much of IT do we use ?

Every so often the question comes up which IT and business is expected to answer. “How much of the features of the ERP/CRM/SCM/… do we use ?” How do we increase this to gain the most of from the investment made ! And everyone gets down to analyzing the feature set once again, painstakingly attempting to move beyond the standard 30% number in the good implementations. Many CIOs struggled in the last year or so to provide a rationale or undertook the task to improve the usage. The expectation needs some careful analysis to understand why this question comes up periodically and specially in difficult times when other investments are scarce.

When organizations invest large budgets into any commercially available standard software solutions, the expectations set by vendors, IT team and occasionally the business project lead tend to indicate that upon implementation, the enterprise will transform itself from current state to a highly optimized state giving it a significant advantage in the industry. This overselling of benefits continues even today many decades after the 3-letter solutions entered the IT arena.

Any large generic solution coupled with industry specific templates or add-on modules will be feature rich in its endeavor to address all types of scenarios irrespective of whether they occur with your specific organization or not. Based on the specifics of every company, some of these are executed, while others are deemed not relevant. Thus starts the journey of partial usage, which is accepted during the project. Over time, the vendor continues to evolve the solution based on customer feedback and industry evolution, and companies may adopt incremental functionality or not.

I believe that CIOs should draw parallels from other commercial products to educate the business on why usage will always remain sub-optimal when measured as a percentage of total available features. An example could be the humble cell phone which people buy based on new features that are added faster than most of us can comprehend. 90% of the users including the same corporate teams, who berate the IT solutions inadequate usage, do the same with these devices. Or move the lens towards television sets, which we all buy after careful evaluation to only use the most basic features.

We keep on upgrading office productivity solutions like word processors, spreadsheets and presentation tools, but rarely evolve beyond the earlier feature usage. Why do we then run after every new version ? To remain current and compatible off course; can the same apply to our ERP/CRM/… solutions ?

Wednesday, December 02, 2009

A week full of Mondays !

I wrote this one after I heard of the untimely demise of Ranjan Das, CEO, SAP India. It appeared on TechTarget on November 9, 2009.

Manic Monday was a song for me from the music band Bangles, until I entered the corporate world. In the world of IT, I was told that every day is a Monday, the IT organization is always running to stay at the same place. In the initial years I thought I was missing something and maybe as I move up the ladder, the realization will happen on how bad Monday can be. I used to see many wrinkled faces with worry written all over. I was told stress causes that.

IT was required to ensure that systems worked round the clock, week, month, year, millennium and IT did. Monday was weekly review meetings, MIS reports, higher load on the system, IT under pressure ! Most CIOs bend backwards and some forward to meet the challenge. Innovation became a basic expectation, change management, know the business, the list is endless. Start running faster ?

Why should Monday be any different ? Because it comes after a weekend of relaxation ?
If so, then people who work 6 days a week (there are still some enterprises who work 6 days a week, at least every fortnight) should be less stressed over Monday, but that is not the case. Or that stuff piles up over the weekend which requires quick attention on the first day ? If this indeed is the case, in today’s smart phone, wireless laptops and many other ways to remain connected, typically events do not wait until Monday to seek attention.

So what causes Monday days ?

As I moved companies and up the ladder, the Monday phenomena remained elusive until I attended a training course that helped me understand human behavior and how people react to different situations. Slowly I began to realize that the Monday Blues are a self-inflicted disease by the corporate world which comes out of need for action, activity and attention. Work pressure is here to stay, Stress is purely optional, and that applies to the Monday phenomena too.

Whenever I fixed external meetings on Monday mornings, people wondered whether I had nothing to do or how I manage to “manage” Mondays. My comment to them was and continues to be that: When process is set, and the team knows their roles and dependencies, the Monday chaos is minimized to a large extent. Do not focus on the activity, focus on the outcome, delegate the task, do not abdicate, or else pressure only rises. There is no magic formula or Holy Grail, but planning and discipline that helps you overcome the flurry of activity demanding your attention.