Finance, insurance, manufacturing, security, marketing, healthcare and the government - the 16 CIOs hail from diverse industries. But all arrive at the Window East Room of Singapore's Four Seasons Hotel with one common goal, to seek their counterparts' opinions on how to better improve on their management of IT in their companies, in order to ensure their organisations' survival and prosperity, especially given the dark cloud currently blanketing the economy.
The CIOs are present for CIO Asia's breakfast briefing, titled 'State Your Case', sponsored by BMC Software. The senior IT executives are there to learn how to wisely utilise their mostly limited IT budgets, and perhaps alter the way they perceive and deploy technology within their enterprise.
What constitutes costs? How not to sacrifice future business growth in the name of decreasing expenses? How can they, as CIOs, better understand their organisation's business, and what pitfalls should they avoid? Business optimisation is a term on the lips of many. But perhaps, optimising a company's IT operations has been overlooked for too long. This oversight is a point CIOs have to address, with little time to spare. Efficient, sensible management can mark the difference between a company which stays afloat and even thrives, from one which sinks under pressure, both internally and externally.
Ross O. Storey, managing editor, Fairfax Business Media Asia, kicks off the roundtable discussion by stating the event's case at hand - CIOs are under increasing pressure to show results in the shortest possible time.
"Return on investment [ROI] was once something companies planned to achieve within three or four years, but now enterprises have a much shorter outlook and want ROI in a matter of months, not years," says Storey. "Yes, we are in an economic recession, and you probably don't need me to tell you that the pressure is on."
Businesses can, however, remain hopeful that the financial crisis will not last forever, and positive thinking is a step towards achieving success, says Storey. "President Obama has recently been talking about glimmers of hope and green shoots of recovery, so let's all support him by being optimistic, and thinking positive thoughts, about a quick global turnaround.
"Today is a great opportunity for you to hear from some experts in stretching your IT budget dollar even further, to discuss your concerns with some of your distinguished fellow peers, and hopefully discover some solutions," says Storey.
Bread and Butter
Scott Halstead, IT strategy and transformation partner at global consulting and technology services firm Accenture, agrees with Storey's assessment that companies are demanding more palpable results, with regard to ROI. "We're seeing a lot of pressure on more immediate results, especially in the cost area, and it's much more difficult now to sell and initiate business value propositions," says Halstead.
Halstead, however, warns against common knee-jerk reactions which companies might implement in order to cut immediate expenses, such as stopping projects and trimming labour costs, due to the potential negative consequences of such actions. "Such reactions have the ability to prevent companies from coming out stronger on the other side of the recession," says Halstead. "Knowing what IT is doing for your bottom line is a bread-and-butter issue."
Just what companies expect of IT is also an issue that continues to pose a challenge, according to Halstead. "Businesses get the IT they deserve, and the expectation on IT remains a frustration," says Halstead.
Having a clear picture of just how IT serves the organisation is critical, says Halstead. "IT needs a seat at the table. Transparency is required to see where the IT spending is going, in order to follow up on benefits realisation. Everyone calls for this transparency, but nobody does it."
Enterprises should focus on shorter, faster delivery, Halstead says. "Take CRM and sales applications, for example. CIOS could consider the software-as-a-service approach, rather than just jump and implement an enterprise solution."
Halstead is also of the opinion that high-level executives in the Asia Pacific are relatively more optimistic towards the economic crisis, compared to their counterparts in the United States and Europe. "Here, we see a genuine intent to move forward and put these IT capabilities into the business. I'm glad to be here right now, rather than back in the United States."
Halstead also notes that expenditure has to be considered beyond its traditional connotation. "Cost savings alone is a diminishing return," he says. "Many companies function on a system that lacks transparency. Costs have to be presented in a way that's easily digested, so businesses can make the right decision. Cost has to be viewed not from an accounting perspective, but a demand perspective."
"Companies should always resist the temptation to mortgage the future," says Halstead. "We are seeing companies which believe they have outsourced too much of their operations, and are now seeking help to rebuild the organisation."
Chip Salyards, vice president, Asia Pacific, BMC Software, speaks of complex issues associated with business services management. "It's actually a very basic concept, aligning IT to better support the business. But the reality is many companies are aligned in many different areas, and it's not an integrated approach,"
Transparency and a detailed breakdown of various aspects of the business are often challenging to achieve, according to Salyards. "Some customers are unsure of where to start. There are all these deficiencies within the business that you have to break down, in order to get a specific calculation for the return on investment," he says.
"Business services management is about taking that infrastructure piece, understanding how it applies to the business services, and having that one single point of reconciliation, to be able to run your business," states Salyards. Next the seminar's attendees speak, sharing their experiences coping with sometimes limited budgets and higher expectations.
Lim Chin Siang, director, IT and technology group, Media Development Authority Singapore, relates the challenges faced by an IT head of a government body. Unlike many companies in the private sector which face budget cuts, Lim's challenge involves having to cope with greater budgets but exponentially higher expectations.
"Government agencies such as us have been given a different approach. The funding is there, but the criteria for projects are also 10 times stricter. The expectation is when $X goes into a project, $Y comes out of it," says Lim. Chong Kwong Chow, director, global technology services, Asia Pacific, Honeywell, speaks of how knee-jerk reactions are sometimes carried out in what he terms 'traditional' firms such as his. "Companies are constantly placing emphasis on earnings per share, and we've taken some of the traditional knee-jerk approaches to please shareholders," says Chong.
"But we've also learned to reprioritise, and even speed up certain projects, due to tangible ROI. So it's a two-pronged approach we've taken. We also realise it's a good time to take advantage of the current economic situation to buy IT resources at lower than usual prices, in order to position ourselves better when the economy recovers."
Halstead also talks of how the economic crisis has brought about new dynamics to the relationship between customers and vendors. "There is now, more than ever, tension between vendors and end-users," he says.
Salyards feels one aspect of a healthy vendor-customer relationship is not to press customers for more than they can give. "You should not hold them over a barrel at this point, and there are several different options should customers be facing cash flow issues. But the real key is understanding what customers' problems are, and then sitting down to solve them."
Chong feels negotiations between vendors and customers can also be brought to a new level, due to the financial situation. "Both parties realise they have to do what they can, to achieve their targets, though these targets may not be common."
Lim points out a constant dilemma CIOs face: that of a brilliant vendor team which might change in composition very quickly due to job market attrition. "Vendors can paint a beautiful picture, with very capable senior management, but what about their subordinates?" he questions. "Some vendor teams, within a 10 to 20-month period, can have almost half the team changed. What protects the customer, in such a case?"
Salyards' response: vendors have to uphold their end of the bargain, and not overpromise and under deliver. "That's what service-level agreements are for, to prove to people that they're not doing something," he says.
The issue of keeping costs in check also finds its way into the discussion. One way to keep costs down without potentially detrimental consequences, according to Chong, is to attempt to change end-users' behaviour. "When times are good, nobody cares how high their mobile phone bills go, but now, users need encouragement to keep their bills down."
Peter Lye, strategic projects, contract management, NHG Data Centre, Integrated Health Information Systems, says CIOs need to strike a balance between what constitutes the 'fixed' and 'variable' portion of their costs. "Often, the 'fixed' portion, such as labour costs, is high. Hence, we need to strike deals with vendors, to see if our costs can be lowered via a pay-per-use model for software, for example." Adopting a cautious attitude towards spending can also help tide a company through tough times, says James Lim, director, information and communications technology, United Premas.
"We've always been prudent with our spending, with a major investment in business continuity because we cannot afford downtime to any of our major cities," he says. "So the downturn doesn't hit us so much, as we've always been spending wisely."
David Skinner, vice president, IS strategy and application services, Starhub, says efficiency, and getting more out of existing resources, is a vital aspect of his operations. "Efficiencies can be gained through process engineering. Quite often, we're guilty of buying tools and using only 20 per cent of their capability. Now is the best time to get more out of what we've deployed, and to ask if we're using it effectively."
Lye next describes how a password reset facility his department rolled out did not go according to plan, due to the mindset of its 15,000 users. The system was deployed two-fold: a self-service system and a human-operated telephone system. Resources were allocated to cater to a greater demand for the former, but the department found that most users still prefer using the latter, which resulted in a significantly higher cost ratio.
"We thought we had all the bases covered, but we overlooked the psycho-social aspect. People still prefer speaking to another human being," says Lye. "Factors such as these carry a lot of risk, and this risk is higher when you venture into uncharted territory. IT departments need to put in place an exit criteria when a project does not go as planned, and withdraw when the criteria is met. It'll be more expensive to keep operating a white elephant project, otherwise."
Halstead agrees with Lye, saying: "Getting the software in and installed is one thing, but making the user behaviour change is another. IT can't be the bad guys to instil this change, they need support from the top."
Nick Lim, managing director, ASEAN, BMC Software, suggests that perhaps getting users more involved in an organisation's operations can help them realise the benefits of automation.
Bridging the Gap
Automation within the IT department is also one point CIOs have to take into considering, according to Halstead. "IT has an automated business, but it is not automated in itself," says Halstead. "At the end of the day, putting new capabilities into IT is what adds business value. You have to make sure you're not leaking money through the non-delivery of projects."
Agreeing with Halstead, Salyards says: "You need to articulate what the value of IT is to the organisation. By training, engineers are more methodical. The gap that needs to be bridged is to prove IT's visibility to the business people, and convince them of what you can deliver. "
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