Is the CIO loosing power within our customers?
I was sitting in a Small Business Server discussion at the WPC and the presenter, Richard Opal, made the statement: "our CIOs are loosing power within our customers." This isn't the first time I've heard this. I've heard it too many times to count, but for some reason, when Richard said it, it really resonated with me. Let's see if we can peel back this onion a bit. Where is this thinking coming from? Is it for real? Are our CIOs loosing influence within their own businesses? You tell me. I don't feel that every CIO is loosing power, but unless the CIO works for an IT company, IT is not their core competency, right? Why would a portion of the business that is not responsible for revenue generation wield much power?
I've been noodling on this for a while, I've listened to numerous analysts and "experts" comment on this, so let me know what you think of the following:
Are our IT decision makers losing influence within their own companies? More and more, the business units within companies are purchasing business solutions that meet their needs; and then they are telling IT to implement the IT portion of the business solution. I'm seeing a trend that IT is not even consulted before a new solution is purchased. This is a concern from a lot of different perspectives. I'm not talking about "protecting our turf". IT is supposed to be a business enabler. IT is kinda like the Marines, we're here to serve at the pleasure of the president, or in this case, We're here to serve at the pleasure of your Business. OK, so if we aren't protecting our turf, why should we care?
How about the reduction of IT complexity? How about the fact that IT budgets are not growing? If you're lucky, you're budget didn't get cut, but far too many budgets are shrinking. It's tough to just maintain status quo in your infrastructure when your funding is declining, you think? Now if a business unit purchases a business solution that does not fit harmoniously within your organization, you now need to spend your declining budget to integrate this "foreign" solution, don't you?
OK, so what if the Business doesn't ask you to integrate the solution? What if, the Business purchases the solution and the installation? That can be a much bigger risk because you now have an outside group doing the work, and their only goal is to prove that their solution meets the expectations. I'm not saying these people want to do us harm, we've all been in that position, but if your goal is to demonstrate the success of your product; are you really concerned with any other aspects of the infrastructure? Right! Your vested interest is in proving the success of your project as quickly as possible. What's the shortest path from point A to point B? What if the existing infrastructure gets in your way? What if the security posture of the infrastructure is too strict? If it's too strict, does the new solution require relaxing the corporate security posture? What next? No matter who installs solution, what compromises have to be made to ensure the success of the new acquisition?
Let's say the integrator comes in and makes needed changes to your infrastructure that ensure the success of their deployment. Now the new product works, but what if some other aspect of your infrastructure doesn't work? Who's responsible for fixing that? Do you really think this external integrator is going to chase your "networking bugs"? Who do you think really gets the blame when some other portion of the infrastructure fails? Let's be honest, if the business made the acquisition and hired someone to deploy the solution within your business, do you really think the business has any confidence in their internal IT organization? I'm not saying that this is a tell tale sign, please don't make that assumption. There are a large number of IT shops that operate in this model. Some of my customers' IT staffs just to keep everything up and running. These businesses accept the IT business model that they will bring in specialists to integrate each new solution. The point I'm trying to make is that someone needs to have a vested interest in the overall success of IT. OK, so I started this discussion with the relevance of the CIO, right?
Here’s a simple test, it’s not 100% accurate, but this does help illustrate the point: How many CIOs within companies still, or ever did, report to the CEO? How many CIOs are reporting up through the CFO? This analogy is not always accurate, but this reporting structure can be pretty telling. Who cares who the CIO reports to? AND if the CIO reports to the CFO, doesn’t that mean that IT is closer to the money?? Nope! Generally, if the CIO reports to the CFO, IT is perceived as a cost center. Worst case scenario is that IT is perceived as the group that always says “No” and continues to cost too much money. Hmm, what do you mean? Think back; how many times has IT been asked to implement a solution for the business? Think of all of these requests, how many times has IT said No to these type of requests? Or, how many times has the deployment taken longer than the business expected it to take? Or cost more than what was budgeted? Or both? It only takes once or twice and the business, like everyone else, will try to work around the obstacle... Right? Now, if IT is perceived as the "no group" or "the group that doesn't 'get' the business", I'll bet that the business units have also learned that they don’t have to go through IT. Let's really think about this, the business grows the company, IT is just the enabler, right?
If your CIO reports to the CEO, there’s a better chance that IT is perceived more as a business enabler and not a cost center, but this is no guarantee. Some CIOs report to the CEO just out of respect until the current CIO retires, or "that's the way it's always been". Once your CIO retires, how many companies have reorganized and moved the CIO under the CFO? If your CIO is higher in the food chain, it’s likely that IT has helped other business units increase their productivity, productivity that can be mapped into generating more revenue for their company. Again, unless our customer is an IT company, their IT is not generating revenue. If you are not a revenue generator, then you are a cost center. How much influence do cost centers really have within a company?
OK, did that help? So if our CIO's are loosing power within the company, how are the business using IT to grow their bottom line. The modern day Golden Rule: "Those that have the gold, makes the rules". So if IT isn't bringing in the revenue, the business group that is bringing in the revenue has more influence when it comes to making business changes, or purchases. If a solution provider can show a business how they can reduce cost, increase production, and / or increase revenue; don't you think the business will want to leverage this new solution? Yes, and that's the risk here. If the business does not feel that IT is a relevant portion of the business, the business will most likely purchase a solution without the involvement of IT. This is big! Our core business directive within our companies is to enable the business to be more successful. If IT is perceived as an obstruction, not an enabler, the end result is that we will end up hurting our business. We are all looking for win-win scenarios, and here, the win-win scenario is to continue to grow IT as a significant contributor and enabler to the business. This is the responsibility of IT, remember, we are there to serve at the pleasure of the business!
There are a number of IT companies that directly approach your business units without the involvement of IT. These new solution providers have learned to follow the money. I think this is an important point. Traditionally, IT companies have demonstrated features and functionality of new products. We try to “sell” our new products to IT and then hope that IT can derive business solutions that will benefit their company. Some of these product companies are now stitching their products and features together into viable customer solutions. These companies are then presenting these solutions to the business units. They are approaching the business units, the people in the company that actually generate the revenue. Remember, the golden rule?
OK, so I've talked about a lot of the things that can cause the CIO to loose control of their IT infrastructure, so how do we avoid this situation? How can IT continue to contribute to the business in a positive way? How can IT continue to grow their relevance? How can IT continue to partner with the business units so that when the business is looking for a solution, the business and IT partner together to make the best decision for the overall business.
I haven't found a simple solution to this situation, but we are working to assist you and our customers with business solutions. Look at Dynamics. It's composed of a number of products, AD, SQL server, Exchange, Sharepoint? If we show this list of products to the business units, not only will your business units glaze over, but they will continue to believe that IT is more about the "cool" technology and not focused on helping grow the business. Let's learn to speak the language of the business. They've already proven that they are not going to learn our language, and they shouldn't. Sometimes these business owners don't respect IT, or even think IT is complicated. They all have home PCs now and they don't have problems. If computers were really difficult, why is it that our children running circles around us when it comes to computers and technology?
These solutions providers present a vision of business a solutions to the business unit. They show the business how their solutions can help increase their capacity to deliver additional value to their end customers. When the people that are generating the revenue within a company ask the business to reinvest in their continued growth, they always have the ear of the CEO and CFO and they get what they want almost every single time. Got that? If the people printing the money ask for more capabilities, they usually get them without too much difficulty. Let's continue to talk about this, but what do you think? Make sense?
Until next time!
Rob