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Fri, Feb 20, 2009 15:17 EST

Why the Recession Is Marginalizing CIOs

Topic: Enterprise Management

Blog: Enterprise Software Unplugged

Current Rating: 5 Comments: 7

That sucking sound you've been noticing during this recessionary mess we're all in: That's the sound of CIOs' clout being sucked away.

It's not that loud. Or obvious. But it's there.

With each passing day, CIOs are being marginalized in one way or another: by a CFO making deep budget cuts into a bloated IT department's operations; by business execs getting angrier about the typical 12- to 18-month ERP or CRM software implementation that is unlikely to come in on time, costs more than anticipated and typically delivers unsatisfying results; by the SaaS vendor who does the end run around the CIO and now sells directly to line-of-business execs; by the supply chain chief and his frustration over why he still has to use the fax machine to communicate with sourcing partners in China; and by the CEO and his belief that while enterprise systems are important to his company, his CIO's team is not giving him what he needs right now.

Perception is, of course, everything. Even more so today. And the popular perception of IT is about as good as that of Illinois politicians right now, according to 2009 State of the CIO data, which we combined with a Forrester Research survey of some 600 business executives. The research paints a grim picture for IT executives.

For instance, business executives said the top IT priority and most important business driver (cited by 53 percent of those surveyed) was acquiring and retaining customers. Yet how well did IT actually support that mission during the past year? Nearly 50 percent of the business execs judged IT's performance as "fair" or "poor." Another 5 percent said IT did not support acquiring or retaining customers at all. Business execs' ratings of IT's impact on managing customer relationships were equally bad.

The disconnect reminds me of "The Bobs" famous interview of Tom Smykowski in the movie Office Space: "What would you say ya do here?"

Also, slightly less than half of CIOs said that IT is still considered a cost center. And cost centers always get cut first. (As do expensive executive salaries.) Slash, slash and slash some more.

CIOs and their IT departments may have escaped or been just out of sight of the bean counters' eyes during the last couple of years—our data shows that nearly half of CIOs report into their CEO now, while only 16 percent report directly to the CFO—but that will probably soon change. In today's economic climate, CFOs will once again be wielding control over the "cost center" that is IT.

And they'll most likely be incredulous when they start digging deeper into IT's ledgers (if they haven't already).

I can just hear the conversations among the executive team now: We are paying how much to (take your pick) Oracle or SAP or Microsoft or IBM or HP for (take your pick): sky-high software upgrade costs that offer little to no value, maintenance fees that are actually going up this year, and escalating infrastructure and data center expenses.

"Hey, Mr. CIO: Are we doing anything with Google Docs? Open source ERP? Are you even trying to save us money?"

"And all of this IT gets us what, exactly? Isn't it still true that the company's decision makers still fly blind and continue to make half of their 'business intelligence' decisions from their gut, rather than from accurate and true business data?"

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Average (3 votes)
5
 
 
Mon, Feb 23, 2009 16:20 EST
Anonymous user
Posted by: Anonymous
Rating: 90

Every less convenient financial situation is sharpening pens of business executives.

Business overheads are the first to go, and if the CIO position is classified that way by not delivering real business value - it will go together with other not critical expenses.

This process it is not an exemption to the rule but part of it.

CIOs having only technology aspects in mind will be replaced by business managers with some technology skills, or technologists with very extensive business skills and experience. And if no candidates are found around, CFOs will take the role for some time.

We all are working for the business, and business is dictating the rules. End of era for technology implementations without immediate return is promptly approaching.

 
Tue, Feb 24, 2009 20:23 EST
Anonymous user
Posted by: Bruce Reirden
Rating: 90

Is this something new? CEO's eliminating unecessary expense, including a CIO that doesn't get it? What a concept!

Any CIO that is not taking actions to increase revenue, reduce costs and enable more business efficiency better be cleaning out the office.

CIO's need to take a serious look at the implementation projects and the expected deliverables focusing on quick wins and positive results. Long term, expensive projects that consume significant resources with dubious outcomes are gone.

CIO's like CEO's need to focus on the business, not the technology.

 
Wed, Feb 25, 2009 11:56 EST
Anonymous user
Posted by: Anonymous
Rating: 90

What a trite and marginal article. You're talking to CIO's here.....tell us something we don't know or haven't read 1000's of times already. If this is news to anyone out there, you're most likely not a very good CIO and not a strategic decision maker within your Firm.

 
Wed, Feb 25, 2009 15:33 EST
Anonymous user
Posted by: Mick Andrus
Rating: 90

He makes a few good points but it all seems to come back to business alignment. IT teams that demonstrably contribute to earnings will remain intact or even grow. Those that don't, won't.

I hope I get the quote right from Warren Buffett when discussing any recession. "Those that are swimming without trunks will be exposed as naked when the water level falls."

It's true in finance and it's true in IT.

Let's have this discussion - how do you get alignment in the mid-sized organization - in growth or recession - when no formal strategic planning structure exists and executives don't have time to care?

 
Thu, Feb 26, 2009 0:13 EST
Anonymous user
Posted by: Anonymous
Rating: 90

Mick, it is an interesting point.

I guess you can not align with non existing strategy, and cannot convince executives who do not care.

Are there many structures in place which are known to us, which are at this level of (mis)management?

How to find out and then reconfirm the informal strategic directions - so even in absence of formalised plans CIO travels in line with executives expectations?

One option is to talk and listen, then make informal agreements and advertise informal ICT strategy for executives comments. Add the comment "If I do not hear from you I unerstand that this is covering well our discussions and that you are reasonably comfortable with the outcome".

Any other proven concepts which may work?

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