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The fundamentals of tech investments today

Alexander Bloch | Jan. 7, 2003
Trends in IT deployment and where your technology budget should go

As a member of the board, in a previous job, which met once a week, I recall reserving 15 minutes on the last Thursday of every month, and devoting it to the discussion of new technologies. Sometimes I would present, sometimes we would have someone from the business do it. That was a very powerful motivator because it gave me and my business colleagues a sense that we were on top of the business. We were focused and we were monitoring what could have affected our business. My staff were able to work out of their normal domain and share what they knew with their leaders. Anybody whose idea was particularly innovative would get a special bonus. CIOs would benefit tremendously by having this kind of window, of time and opportunity for interaction and exchange, reserved for their senior colleagues. It could keep their organisations protected from the dangers caused by disruptive technologies or business models. Findings from an IBM survey of CEOs last year, reveal that IT was nowhere near their top choices of places to look for innovative ideas. Therefore, it is important for the CIO to rethink the environment that he/she needs to deploy. The CIO should be a leader by example, and drive the collaboration that ignites innovative ideas. Heres one example. At IBM, we have 200,000 active sessions of Instant Messaging running at any given time. This is a very powerful tool for tapping the right people with the answers to specific questions we need addressed, instantly. Ideas can be shared and new ideas can be born.

Financial Madness Must Stop

There is a sad reality of life to consider: the financial aspects of running data functions. To illustrate that, Ill refer to one of the more recent engagements I have conducted. This was for an Asia Pacific bank. Its a sizeable bank, it had about US$250 billion worth of assets and operated 13,000 branches. And it had a roughly US$0.5 billion IT budget, which on the face of it is no small sum. However, the distribution of that budget told a less positive story. Over 80 percent of it was used to maintain the status-quo of its IT setup, and only US$75 million out of the total US$500 million, is left for discretionary expenditure. Less than 10 percent of its the entire IT expenditure was devoted to creating new capabilities. In this scenario: How can CIOs innovate? How can they pull off this wonderful stuff that CEOs are expecting? What a CIO has to accept and act on today come under three major categories.

First: driving business and innovation has to be the CIOs responsibility. That is to be placed as the center stage of his/her game. Second: the CIO has to be effective in bringing people forward and into the collaborative cycles that IT enables. And third: business and IT integration is going to be crucial for the CIO, if he/she is to become an enabler, incredible player and partner to the business. The most critical and current aspects of that include a better and closer alignment of IT and business. This is something IT can do by deepening its understanding of business priorities. The deployment of flexible infrastructures is also a key requirement. CIOs will increasingly find business leaders coming to them with demands for the enablement of greater agility in their business processes. Innovation is here to stay. The CIO must be adaptable. Another requirement is this: if adopted, a service-oriented architecture [SOA] needs to be clarified. Many people associate SOA with some kind of IT initiative, or a new set of product or a new set of objects. It is nothing like that. SOA is being driven by the business. It is a new model for technology architecture and technology management. It provides a way toward enabling a kind of flexibility in the business that it needs. Faced with the ever-accelerating pace of doing business today, most of us cannot easily implement the necessary changes to IT to make our business more effective. If you want to introduce a new product to the market, consider the number of things you need to touch in your infrastructure in order to facilitate the necessary processesit is not an easy exercise. There is no overnight solution for something like that.

 

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