CIO Priorities And Best Practices During Recession

At a time when the economic downturn is gnawing at the heels of CIOs, they are being pushed to walk the tight rope as a means to find the perfect balance between spending on IT and realising benefits from it.

John Mahoney, VP and distinguished analyst-Research, Gartner, says, “The fact is that the frontier of business value from technology is moving beyond the mere delivery of excellent, high-performance IT services. Other than the delivery of high-performance IT services, there is the delivery of value involved around assets, business processes, business information and business relationships. So if all the above is added to the changing technology foundation and the turbulence in the external life, it ends up making life very complicated for the IT organisation and CIOs.”

According to Mark P McDonald, group VP-Executive Programs, Gartner, things are very volatile as of now and it’s difficult to know how they will go forward. He feels that in this kind of an environment, it is important to lead not only IT but also the rest of the enterprise to do something constructive. “The data that we’ve collected reflects that enterprises, CIOs and IT organisations are focusing on making the enterprise more effective overall and capable enough to achieve its strategic goals and objectives. This is probably the best thing that can be done in the current situation of uncertainty and volatility.”

Keeping the IT ship steady during turbulent times

Sumit Chowdhury, CIO, Reliance Communications, says, “The mantra of the day is to be as cost effective as possible and this may involve buying the cheapest produces of services, optimising on hardware and software, application re-use across group companies, and also looking after people considerately because they are our biggest assets and also the most flexible ones.”

Chowdhury is also of the opinion that a CIO needs to run the IT business every day as though there is a recession. Optimisation has to be done all the time. He feels that recession is not the only time when CIOs have to learn how to do things better, on the contrary they should always innovate, take cost out of the business, improve processes and act like a profit-centre all the time. “Recession or no recession, it should not affect our way of working and we should be confident that in India we run things very efficiently and that it gives us an edge over the rest of the world.”

“Keeping the IT engine running should be the first step,” says Satish Pendse, CIO, HCC. According to him, the second important aspect to keep in mind is that IT initiatives which are quick, easy to implement and more importantly, those that can give benefits in quick time should be concentrated upon. Initiatives, which promise benefits over a year or two, have no relevance now; however, those with benefits over 2-3 months are wise to invest in. The fact is that right now, the implementation time itself is crunched for time.

“When the going is not so good, that time our team looks at our body language, how we communicate and that is where the job of a leader is to keep the morale alive. In every moment there is an opportunity, one has to just keep scouting for it and make the best use of this time to do some developments within IT, which would not have been possible otherwise.”

CIO Priorities and Best Practices During Recession

Partha Iyengar, VP, distinguished analyst and regional research director, Gartner India, says, “It is important for Indian CIOs to recognise that while the business is demanding some cost optimisation initiatives, at the same token they should not lose sight of business growth opportunities, customer acquisition initiatives, which are also business priorities, and they also need to work with the business leaders, in terms of which projects are supporting and expanding business growth and need to be protected and may even be expanded from an investment perspective. The other key message is that rather than looking at the old style of cost cutting followed during past recessions, it is time to look at changing the entire cost structure of the company.”

McDonald says that one of the things that he has seen other CIOs do to create a real impact is to get connected to business processes and business process change. This is important because as core applications our built out, there is little chance of changing business processes without changing IT. Business process involvement and improvement represents a significant opportunity for CIOs to deliver deep business value beyond just providing applications in dial tone.

The second important point is that as organisations build up IT bases and transaction process bases, they are also building up bases of operational data. So the notion of using that operational data becomes extremely critical. McDonald adds, “We see the potential for CIOs to use operational data, the same way that CFOs use financial data with one very significant added benefit, which is, operational data has a tendency to be forward looking, it often shows leading indicators. Financial data, on the other hand, tells you what happened previously. I think the notion of getting a better hold of leading indicators through things like competitive analytics and new analytic capabilities is really significant for CIOs and more so for Indian CIOs as the base line of that application and operational data is becoming online for the last year or two.”

McDonald says that earlier the primary focus was on execution of projects and how to build and support them and IT was largely organised along asset lines. CIOs now realise that their job is no longer just to spend money to run projects but rather to participate and contribute to business change and performance. This involves re-organising IT around processes and products and recognising how the organisational and product structure really drives the IT cost structure.

Mahoney concludes, “CIOs need to have a balance though it might be slightly uncomfortable initially. It is a balance between doing some very specific tactical things such as saving costs, reducing cost of operations, helping the business to reduce costs, making sure that short-term issues are taken care of in terms of supplier viability etc. CIOs must have short-term, pragmatic and tactical strategies for these goals. At the same time, they need to make sure that their business stays in good order so that when the recession ends, they haven’t cut so hard or so aggressively that they have damaged the organisation’s ability to scale back up again. Secondly, they need to make sure that they’ve put in place the conditions that make it possible for the business to innovate because even in really tough times, there are always opportunities for businesses to do new things.”

As CIOs try to walk the tight rope, it is clear that innovation and business process alignment are two factors that they cannot overlook for a smooth ride through turbulent times.