Executive Advisory Program

The Economy: End of the beginning or beginning of the end?

Posted by: Jack

End of the beginning or beginning of the end? How can we tell?

Jobs report not as bad as people expected.  IT recruiters are telling me they are as busy as ever (hard to tell sometimes -- it's a business that runs on hype). Like a mouse through a snake, the credit crunch winds its way through foreign economies, without as big an impact as here.  Growth in Asia is fairly strong, constant.  Weak dollar has helped out exports;  Multinationals (like IBM) still report strong profits. The market breaks 13000.

On the down side is inflation -- gas, food increases are hitting hard.  IT shops are holding steady - no real layoffs or reductions, but lots of belt tightening.

Then there are the gloom and doomers - the '29 club.  An expectation that the past year has been just a taste of things to come , and reflects fundamental flaws in our economic system.

On balance, the positives outweigh the negatives, IMHO. 2008 is over. What's done is done. 2009 is not going to be a gang buster year, but we'll see more growth than 07-08. The "mule" scenarios (apologies to Asimov's Foundation) that could upend that?  Food/energy gets much worse,  consumer credit (read: cards) becomes an issue and banks start to fail.   I think those are a possibility, but not likely. 

And throughout it all, in the second major economic downturn of the Internet era, it is clear that IT has finally gotten some respect and is not the whipping boy, or choice of first resort, for cutbacks.

That's progress.

EU regulation,entrepreneurship, and the dark side

Posted by: Jack (while traveling in the EU)

A colleague recently remarked about how difficult it was to do things according to the letter and spirit of the regulations in the EU.   I suspect many are in violation of the letter of the law, but this friend wants to do it right from the get go -- encrypted data, locked down access, corporate defined and delivered machines.  Of course, there's a lot of push-back from the business, because they have a much more entrepreneurial approach.  So did the traders at Enron, and the result was that the guys who signed the checks went to jail.  (OK - their comeuppance was for a lot more illegal accounting shenanigans that had little to do with the ruthless approach the traders took to the energy market, but don't think that the latter factor in).

Now add to that the recent Bear Sterns situation and the propensity for the US to take a stronger regulatory view --- well, entrepreneurship may be going out of fashion.

Culturally, this trend may be easy for an EU-er to comprehend, but I'll bet in the US it will be hard to adapt, and even more so for the Asian sphere.  The implications for global commerce are enormous, especially given the mobility of workers, and the mobility of company ownership.  The impact on IT cost structure  could, ostensibly, put a non-conforming company on a better cost standing than a conforming one.

My guess is this is one of those areas where companies will test how much they can get away with, pay the fines if necessary, and move on -- all in the spirit of competitiveness, cost, and complexity.  But it's a fine line from that into jail-time for leading an organization that doesn't comply with the spirit, if not the letter, of the law. And in a down-turn economy, regulators may just turn a blind eye (not unlike US aircraft inspectors)...until a public embarrassment takes place; then heads roll....

It's the dark side of the global economy.....

Will work for cell time, errr, minutes

Posted by: Jack

A recent visit to Times Square necessitated that I step over a homeless person with cup.  Yes, I made sure we made no eye contact, and held my breath so as not to take in the perfumed air.  But what was truly amazing was the fact that he was having a conversation on a cell phone, probably trading his stocks....go figure.

So this guy has an office on a curb on 41st and 5th, I have mine near a Great Blue Heron nesting area at N42°58.8174, W071°6.00744.... not much difference (except for the obvious economic ones) -- we both need access to the cell network ( me for 3-G Internet and cell, my guess is that next week he'll bring his laptop to work).

My point is that anywhere/anytime access is changing the workplace, and the sociological landscape.  Millennials have a god given right for access to IM, Youtube, and Facebook -- don't you dare block those at the workplace. 

Doug Merrill, recent  CIO of Google and now EMI, recently asked at a conference why in the world would anyone carry two cell phones?  Unbeknown to him, 70% of the CIO audience did -- one for home, one for work, and never the twain shall meet.  In an era when the rules of personal use are becoming very unclear, it's just good business practice to keep the personal life as separate as possible, so that the call to the lover (vs. the spouse) doesn't become a business issue.  Now I would venture to guess that none of those execs carried two laptops, and that casual journey to the less than dubious website on their corporate laptop at 11PM at night from the hotel room could get them into more trouble than the occasional personal phone call to their child.  Oh what a tangled web we weave.

What are the expectations for work at home? the 24X7 exec? use of corporate resources? 

Not to mention the homeless - a pervasive problem that continues in one of the richest cities in the world; with economy the way it is, can only get worse.  We need to address that too.

IT needs to innovate

Posted by: Ken Anderson

I finished reading an article on how IT needs to innovate and introduce projects to meet business needs. If this is true, what has IT been doing for the last few decades? If IT only introduces projects that are void of any business need, the business must not need anything in the datacenter.

The truth is, IT has been driving innovation for almost 3 decades, starting in the early 80s networking the desktop, automating complex business functions, and providing fact-based information. In the 90s, IT combined multiple business functions into enterprise solutions, connected offices to global networks, and mobilized the office.

As the 90s matured, corporate networks connected to the Internet forming a new platform for global commerce. IT departments moved countless systems to the Internet, battled new security threats, and streamlined basic IT services.

In recent years IT departments, burdened by past technology investments, are moving from fixed systems to virtual environments, combining data sources into intelligent-based reporting methodologies and integrating new collaboration environments. While these changes are incredible, they are focused on connectivity, automation, delivery, and integration of new technology.

Today, IT departments are struggling to maintain legacy investments, provide required services, and fund new initiatives. Once thought revolutionary, technologies that free employees from their desktops, enable a virtual workforce, and provide information—any where, any time, and any place—are now considered basic services and candidates for outsourcing.

With a new “connected world” and countries shedding their 3rd world status, business is changing. IT, innovating alone, finding new ways to deliver, automate, and reduce cost is not enough. The future requires IT to be connected with the business, efficient and flexible, ready to implement new business ideas.

Businesses with experienced, efficient, flexible, integrated and innovative IT departments will have a distinct advantage when implementing new business ideas. Businesses that rely on their IT departments to only optimize and reduce cost are at a disadvantage.

IT stands alone?

Posted by: Jack

It never ceases to amaze me when non-management types (in this case some not-to-be-named non-Burton Group analysts) view IT in a "leadership role" -- ie., "IT will show you how", or "IT will save the day", or "IT will tell you what to do".

"Can IT rescue an ailing US economy?"

Replace "IT" in that phrase with "HR", or "the Sales department" , or "Marketing", or "Finance". Doing that makes the ludicrousness of that statement obvious:  in a business, success is determined by how well those functions work together to create the desired result (revenue and profits), not the success of an individual function or department.

Gartner makes an easy target of IT for unnecessary customization

Posted by: Mike Rollings

On 8 April, Baseline Magazine ran the story “25 Ways to Cut IT Costs” by Chris Gonsalves. In the article Gartner is quoted to say “IT ‘industrialization’ is an opportunity to reduce IT costs and curtail wasteful spending.” Chris then states that “Gartner analysts say IT executives are frittering away as much as 25 percent of their budgets on unnecessary and redundant customization, and IT departments need to act now to take advantage of cheaper products and services.”

What an easy target. I’m sure that all the CIOs are lining up defending their application portfolios; “don’t remove this application, it’s mine”, or possibly “my organization brings in the most revenue, you can’t remove my application”. If you want to look for the reason that their budgets are spent on “unnecessary and redundant customization”, it is not because they are buying the wrong things. Most likely it is the business side of the house asking for and defending the customizations. How exactly does the purchasing of cheaper products and services translate into less customization? 

Vilifying IT will only widen the gap between business and IT and the necessary partnership the two must have to combat this problem.

Captain Innovation! (or maybe not...)

posted by: Chris Howard

I'm not a cynic, really.

Those that know me would probably agree. As Jack on my team likes to say, "I hire people to do that for me." If anything, I think too much about ways out of things, solutions, big picture stuff. So when things are presented that don't ring exactly true, their incompleteness eats at me until I can articulate it. Here, with the help of cameos from my team is a response to a recent Gartner speech. The article which prompted this response can be found here.

The issue at hand is whether IT can come to the rescue of the ailing US Economy, primarily by embracing innovation. The type of innovation discussed is one that reaches out to the business with responses to observed business needs. My issue is that this approach (while laudable for being proactive) is not really innovative, and in some cases may be wrong. What IT needs to do is to become business-like, and position itself as a strategic partner during the creation of strategic objectives.

Ken Anderson takes the first swing:

<ken>

IT departments are struggling to maintain legacy investments, provide required services, and fund initiatives. Once thought revolutionary, technologies that free employees from their desktops, enable a virtual workforce, and provide information—any where, any time, and any place—are now considered basic services and candidates for outsourcing. 

With a new “connected world” and countries shedding their 3^rd world status, business is changing.  IT innovating alone, finding new ways to deliver, automate, and reducing cost is not enough.  The future requires IT to be connected with the business, efficient and flexible, ready to implement new business ideas.

</ken>

Tag, I'm it:

<chris>

The Gartner message still doesn’t raise the level of IT to one of true partnership with the business. It only promotes the idea of IT being more proactive, which is not necessarily innovative. True corporate innovation occurs when business and IT act together to create unforeseen opportunities in the market, which entails more than IT simply proactively reaching out to their business partners. This also implies that business trusts IT enough to let IT suggest new ways of doing things that the business may not know are possible. But, to be successful, IT leaders need to understand how the business context operates. This is the greatest weakness we see in organizations today: technically excellent implementations that don’t support or encourage business objectives have no value. Ultimately, it doesn’t matter how innovative IT is if they can’t relate those innovations to core business goals. The Gartner definition of the “Third Kind of Innovation” simply brings IT up to an expected performance baseline, but does not vault IT over the line to true partnership...

</chris>

To which Jack adds:

<jack>

..or into the role of recession superhero. There is only one way out of a recession, and that is for the business to identify and deliver increased business activity (and profits); IT can play a true partnership role to help achieve that, not the self-centered role of rescuer.

</jack>

Everyone Hates IT

posted by: Jack

A customer dialog today focused on how IT is working harder and delivering better, by every objective measure....but is still the corporate whipping boy.

I don't believe that to be true in very organization, but perception is reality in most.  The comment was made that when IT was more of a priesthood, satisfaction rates were higher, and that as it has gotten transparent, or more populist, satisfaction has gone down.

To a large extent it's a communication issue, and points to the gap between techno jargon, black/white thinking that we learn as part of a Masters in Computer Science versus the ability to commiserate, communicate, and influence -- CIO skills.  Communicate early & communicate often; my recent paper on executive blogs certainly makes that point. 

I am hearing a lot of this -- business people aren't happy, and technologists continue to feel that there is a gap between how they see the world and how their management sees the world. 

One of our services summarizes the effect: "working around the IT walled garden".  It almost becomes a mantra - "if IT does it- avoid it"!  But in my way of thinking this is just business people taking control of their destiny, and in doing so, the expectation gap sets in.

Good fodder for research, and you'll be hearing a lot more about this as we dig into it.

Technology Business Value Déjà vu

Posted by: Mike Rollings

The Federal Computer Week article “SOA experts: Learn to speak business” by Michael Hardy states “for service-oriented architecture to succeed, information technology professionals must understand the business needs of their agencies’ organizations and learn to talk about the benefits of SOA in business terms”. I would contend that for ANY architecture effort to succeed, information technology professionals must understand the business needs and be able to express the benefits in business terms.

The lack of a strong connection to the business has always inhibited technology investment, so has the lack of business participation, demonstrable commitment of sponsors, and the lack of commitment of stakeholders to the result. In my March 10th EAP blog post “Tear down that wall”, I discuss that a concerted effort is required from enterprise architecture and other IT disciplines to improve the discussion of IT value.  To achieve the potential of SOA's long-term benefits, a focus on the business is critical.

In the April 3rd APS blog post “Spanning the layers”, Chris Haddad (Vice President and Service Director for Application Platform Strategies) asks “does thinking about business and IT alignment trigger brain buffer overflow”? He states that during the Burton Group Institute Service Oriented Architecture Workshop sessions last week, the audience was quiet when the discussion focused on how to measure business value, but discussions about technology topics were more animated. This seems to be a recurring theme associated with enterprise architecture and the justification of IT investments.

IT professionals continue to focus on the design and engineering aspects of technology adoption and seem to forget that technology is only relevant in relation to the business value it provides.

5 Reasons to Design for Flexibility

Posted by: Mike Rollings

Today CIO.com posted the article "5 Reasons to Say Yes to Macs, When Your Company Says No".  The five reasons sited reflect a desire to have a choice once again at the desktop.  The underlying issue (again) is migration and legacy.  People are looking for ways to move to any other platform, but the hangover of applications created solely for the Windows platform prevents it. Some day we can write the article "5 Reasons to Use What You Want as Your Client".  But for now, CIOs should look for ways to avoid this trap by creating software that is platform agnostic.  If you want the flexibility to choose, then break the bad habits that inhibit choice.