The worst of the recession is over, and IT management is coming to grips with the “new normal” of slender resources and pressure to make “alignment with business” more than a buzzword. The demand for technical skills is still strong, but if you want to succeed in this “new normal” environment, you have to offer more to your employer — a lot more.
Consider the career of Ginny Lee, who in 2008 became Intuit’s third CIO in just four years. Her predecessors, says the man who hired her, CEO Brad Smith, had the requisite technical chops but lacked a clear understanding of how IT could contribute to the company’s overall success. They didn’t keep their jobs. “In the world of SaaS [1], SOA, social networking, and mobile [2], IT is no longer just about great technology,” Smith says.
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Lee, a former investment banker with no formal training in computer science, exemplifies a tectonic shift occurring in the world of enterprise IT. Today’s CIOs — and by extension, everyone who works for them — are living the “new normal,” an age where budgets are recovering but still constrained, and where IT is responsible for generating moneymaking ideas and applications. The “new normal” means that business skills are essential if you want to climb the ladder to IT management, and you’d better understand that the days of IT being merely a support organization that just keeps the network running are over.
Yes, things are different, but the world of enterprise IT has not turned upside down. Although it’s trendy to think that the days of the big CRM and ERP deployment [6] are past, that’s not the case. There’s been a noticeable uptick in sales of major enterprise applications this year, fed in part by the resurgent merger and acquisition activity, says Mark White, a principal with Deloitte Consulting. Indeed, Oracle had one of its best quarters ever recently with a big boost from the sale of new licenses for business applications.
There is, however, strong demand for IT hands who have the skills to help deploy a new generation of cloud-enabled applications, virtualization, social networking, and mobile services. And predictive analytics is building on the legacy of traditional business intelligence and data mining to become an essential tool for older businesses and Web-centric companies alike that need to move faster — and at lower cost — than ever before.
Above all, the “new normal” is about accepting change. “IT is afraid that its value proposition will go away — and that’s a real fear,” says Steve Sterns, a senior manager of IT at Cisco Systems. “Internal IT needs to transform, and it’s not fightable. Either adjust and learn the new skills [7] or fail,” he says.
The moneymaking CIO
With 40 million customers using its tax, accounting, and payroll products, Intuit generates immense amounts of data. A traditional CIO would view that digital mountain as an asset to be managed and guarded. Lee says her job is to monetize it: “We’re responsible for execution, of course. But we also have to ask what is the business opportunity that we see.”
Backed by a cadre of data analysts, many of whom sport doctorate degrees, Lee looks across product groups to see what data can be mined and exploited. Here are just two of the revenue-generating projects her IT department generated:
- Data from Intuit Online Payroll is used to produce the company’s Small Business Employment Index. What’s more, some of the same payroll data can be used yet again by employees of those firms when they file their taxes using TurboTax.
- Data from QuickBooks online is aggregated, made anonymous, and melded into a feature that lets small businesses compare their critical metrics, such as margins and days payable, to those of competitors. Because the data is so granular, customers can drill down to compare themselves to businesses within a particular vertical and a particular geographical area.
Lee is hardly the only CIO chanting the mantra of monetization. “We’re calling this the era of the moneymaking CIO,” says Gartner analyst Ken McGee. McGee recounts a recent conversation he had with Terry Kline, the CIO of General Motors. When asked his top priority, Kline did not talk about security or network efficiency. “My top priority is helping GM sell cars,” he told the analyst.
For IT to build business, it must first build a new relationship with the business units. Tata Consultancy Service, for example, guides clients to make CIOs a part of the company’s core management group. One customer has added a business relationship manager to work in IT to bridge the gap between the techies and the business groups, says Harcharan Sing Rajpal, head of Tata’s IT application services for North America.
Within five years, that kind of cooperation won’t be optional, and McGee predicts that by 2016 compensation for IT mangers in Global 200 companies will be based, at least in part, on the amount of revenue driven by their departments.
The new IT in action: Applying analytics
It’s not coincidental that IBM, Oracle, SAP, and Microsoft have all made massive investments in BI, or business analytics [8], in the last few years, largely through a series of billion-dollar acquisitions. Oracle bought Hyperion [9] for $3.3 billion; SAP acquired Business Objects [10] for $6.8 billion; IBM bought Cognos [11] for $4.9 billion in 2007, paid $1.2 billion for SPSS [12] in 2009, and plunked down $1.7 billion for Netezza in September.
IBM, for one, is projecting is projecting $16 billion in business analytics and optimization revenue by 2015. To see why Big Blue is so bullish on the sector, consider Infinity Property and Casualty, or IPACC, a supplier of auto insurance with a network of more than 12,000 independent agents and revenue close to $1 billion. Large as it is, once IPACC weathered the worst of the recession, the company realized that it had to find significant efficiencies in the claims process, says senior vice president William Dibble.
A cornerstone of the cost-cutting effort is the use of new technologies, ranging from the simplicity of a cell phone camera to the complexity of advanced analytics software. Instead of sending an agent to take pictures of damaged autos, IPACC encourages its customers to photograph the wreck themselves, saving money and time.
Much more complex, though, is the task of quickly deciding which claims are probably not the fault of its policyholders. “We want to go after the low-hanging fruit first,” says Dibble. With the help of IBM software, IPACC developed an analytics application that sorts through incoming claims, looking for keywords and phrases like “parked” or “garage.” Claims with phrases that indicate the customer probably wasn’t at fault are fast-tracked, freeing up adjusters to deal with more complex cases.
Even more challenging is a still nascent effort to use an IBM analytics tool that prompts claims agents to ask the right question. For example, Dibble says, a client may mention that he’s miles from home after an accident. As the agent enters that fact, IBM SPSS Decision Management will prompt the logical question, “Would you like me to arrange a rental car?”
The really difficult part of the application is dealing with unstructured data, says Dibble. But the payoff could be substantial. “Unstructured data is the richest unmined vein,” says White, the Deloitte consultant. Indeed, finding ways to make use of unstructured data [13] is a key task as IT departments look for ways to leverage corporate data into cost savings or, better still, revenue-generating uses.
Better budgets will help IT transition to the “new normal”
If the recession that started some three years ago was a hurricane that blew away IT budgets, business is now living with calmer but still unsettled weather. Instead of cuts, increases of 2 or 3 percent are common now. But mundane “run the business” expenses are taking a backseat to initiatives, particularly around cloud computing [1], that will save money in the not-too-distant future, says Tata’s Sing Rajpal.
Sing Rajpal has probably never heard of Steve Davidek, but the Tata executive and the system administrator for the city of Sparks, Nev., are speaking the same language. Sparks, with a population of about 88,000, was hit hard by the recession, and when it came time to trim services, the IT department was in the cross-hairs, losing 6 of its 14 full-time employees.
During the very worst of the budget crunch, Davidek’s budget for new projects was zero, and it was all he could do to keep the city’s network up and running. Things are looking a little better now, and if the recession doesn’t go double-dip, he expects to launch projects that will modernize his infrastructure and keep costs down. “Running leaner is my new normal,” he says.
First on Davidek’s list is upgrading his 45-server data center: “We’re about half virtualized now, and it’s been a really positive experience.” He plans to virtualize more of it, and then initiate a desktop-virtualization project. One reason: His inventory of PCs is getting old, but rather than replace them, he may use them as clients. Or, if the money is there, he’ll buy thin client machines. Either way, he figures on significant savings.
Davidek knows that desktop virtualization [14] has not really taken off. But while his budgets were frozen, he made a point of being active in Connect, an independent user group for Hewlett-Packard customers, and says he’s gotten encouragement from other members to take the plunge. He even brought in a vendor to virtualize one PC as a test, and the results were excellent, he says.
Embracing the “bring your own tech” culture
Meanwhile, Davidek and other IT executives are also embroiled in a culture war over the use of personal technology (think smartphones and iPads [15]) and social networking in business, the “bring your own tech” movement [16]. “We want to hire a younger group of people used to using that kind of technology. We can’t be the roadblock,” he says.
In the old IT, where marketing would see a business opportunity and HR would see a way to hire younger, hipper employees, IT would see security threats and threats to job security. Larry Miller, who has headed IT for large retailers and legal firms, saw this conflict firsthand: “Our marketers wanted to use social networking [17] like Facebook and Twitter; IT was afraid of it.” Although Miller has been an IT hand for more than two decades, he comes down on the side of the new technology. “IT shouldn’t get in the way of business. It should build it,” he says.
Such “old IT” conservatism is being challenged from the top, says Cisco’s Sterns. “CEOs read about [new technology] in the inflight magazines. They hear that they can get results for an eighth the cost and they ask IT why they’re not doing it,” he says. Sterns was referring to cloud computing [1] (which is both a form of “bring your own tech” and a form of outsourcing), but the CEOs are of course bombarded with news about iPhones [18], Twitter, and the like and thus want to know why their companies are being left behind.
The acceptance of adopting new, consumer-oriented technologies and supporting the heterogeneity of “bring your own tech” [19] won’t happen over night, particularly at very large enterprises, but it’s a battle that “old IT” will lose in the long run.
The value of soft skills
Not everyone who succeeds in IT leadership will have a résumé like Intuit’s Lee — and hard-core technical skills remain critical in many positions. For example, “everyone wants to use virtualization [20],” says Sean Dowling, manger of recruiting for Winter Wyman, a technology contracting firm “Also at a premium are UI skills [21] and the ability to take mobile apps across hardware platforms,” he says.
But senior executives like Adam Rice, vice president of Managed Security Services for Tata Communications, says when he hires for high-level jobs he’s looking for the “soft skills” as well, such as risk management, compliance, and the intangible “business acumen.”
Intangible? Maybe, but Intuit CEO Smith explains how he wants his IT mangers to think: “When something goes wrong, the purely technical person tells management that the network was down for four minutes. But the business-oriented person says the network was down and 55,000 customers couldn’t reach us, and our call center was backed up for hours.” That’s the “new normal.”
This article, “The new IT survival guide: How to thrive after the recession [22]” was originally published by InfoWorld.com.
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