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The Future of the Chief Information Officer

Jim Stikeleather, Chief Innovation Officer, Dell Services, discusses the changing role of the CIO

With the complete fusion of technology into the modern enterprise, technology and business have become inseparable. Together as one, they are needed to address the bigger world, the bigger society, in which a business must operate. And it’s that bigger world that has changed as a result of the hyper‐connectivity of the Internet that, in turn, has given rise to total global competition and social networks where the future is being discussed, debated and transformed.

It’s in this context that the role of the CIO comes into question. From compliance to cloud computing, from budget cuts to social networks and business innovation: it is clear that the CIO is living in turbulent times. What will be on the CIO’s agenda ahead? Will there actually be a CIO in the future?

In the past, information technology was about productivity; now it’s about collaboration, a shared information base and collective intelligence—the wisdom of crowds, social networks and cloud sourcing of unimaginable computing power, all in the hands of everyday people.

It will indeed be informed leadership, not command‐and‐control management of computing and information resources that will shape the future of companies in the current era of global economic crisis and unexpected change. Agility is no longer an option, a nice to have. It’s the entry price. There is much to learn and cultural barriers to overcome, but the company of the future will not be the company of today.

As we shift from IT with a focus on productivity to business technology with a focus on collaboration; and as we shift from systems‐of‐record to systems of boundless collaboration backed by endless computational resources available to all, the future is here now.

Contemplating any company’s transformation to adapt to the changed world, the implications for IT professionals are profound. Companies will need a far greater contribution from IT than ever before, but that contribution will be of a substantially different nature. For the creation of an adaptive enterprise, a system‐wide view of the company is needed.

Building the process‐managed, real‐time, “social enterprise” will demand innovation centred on the discipline of “general systems thinking” from a new generation of IT professionals, where multidisciplinary skills now outweigh yesterday’s technical skills.

Just as today’s popular title of CIO evolved from programmer to EDP manager to IT director, get ready for a new title that reflects the new skill set needed for leadership as companies go beyond IT and embrace business technology.

CEOs and CIOs won’t be the ones who do all the weak‐ties work. Weak ties are connections to people that you may occasionally come across – a friend’s friend or online communities that share special interests outside of your ordinary interests – and they contain much less redundant information which is often more important for gaining fresh information, connecting new dots and thinking outside your own box.

Instead CEOs and CIOs will be the ones who provide the environment, guidance and the tools for knowledge workers throughout the workforce to capitalise on weak-ties. This also means turning decision making upside down, at the bottom of the organisational pyramid, with front‐line staff where actual events take place.

The pillars of an IT investment have been to invest a relatively large sum of money in a long project cycle, and then wait for a payback by gambling on the stability of the situation. At the end of a given IT investment cycle an enterprise should have a permanent competitive advantage. The end result of this approach is that the ongoing costs of IT have increased so much that the headroom in the budget for new investment continues to decrease. When funding is in short supply and stability non‐existent, the traditional pillars for starting new IT projects are not generally acceptable. So CIOs should stop fooling themselves.

In reality, much of the IT estate is, a requirement to stay in business, pretty stable in terms of the rate of change, a genuine overhead, and should be treated as such in terms of ruthless cost management. On the other hand, the value from using new business technology that CIOs are aspiring to, is focused on individual parts of the business in doing what they do uniquely, but doing it far better. That’s not part of an enterprise‐wide cost recovery overhead model of funding. It’s a directly attributable cost to a specific business activity—and that’s where the elasticity of the cloud computing model kicks in.

The pressure for new projects comes from two directions. One is from the cost‐cutting CFO. The other is from specific functions directly related to the need for intelligence, decision support, and building new online products and services to sell. One of the key advantages of cloud computing is not just that we can build and deploy new business applications rapidly and at low cost, it’s that we can implement new revenue‐generating business models by using situational business processes in the cloud.

The challenge for the CIO is to make sure that this happens in a coherent and cohesive manner in the context of the entire enterprise. Taking on such a role with a direct hand in supporting innovative business models is the challenge that CIOs are currently grappling with.

In business life today, employees and those external parties who do business with our enterprises are evaluating and using technology as a key part of their work, and their business units’ successes. In response to such changes it’s time to consider how to adapt the funding model of the last century to one more suitable for the coming decades, especially in light of unpredictable change in the global economy.

With business technology the focus is on people, communications, and collaboration, not computers and data. The CIO role has evolved from custodian of the infrastructure under the CFO to a business leader with a seat at the executive table. The next‐generation CIO is a strategic agent for business transformation. In the most advanced firms the CIO is the most likely executive to move to CEO. The next‐generation CIO is best positioned to manage the creative‐destruction power of technology in the face of today’s unexpected change and to craft corporate strategy.

I’m trying to get hold of the company website designer to upload content, I suddenly realise that for my Sri Lankan based developer its 4am. From communicating with companies in different time zones to organising meetings with far off business partners, distance in many circumstances hinders cooperation. Many of us will are familiar with the frustrations in the workplace caused by issues of proximity. Being close to those we rely on in business will increase communication, efficiency and savings, the same is true in Outsourcing.

One of the most promising economic developments within London and the UK as a whole has developed from multiple small businesses situated within a single area. Technological hubs as exemplified by the success of Silicon Roundabout, have proven the potential of the UK IT industry and the advantages of creating a collection of upcoming start-ups in close proximity to one another.

Canary Wharf is attempting to replicate the successes in Shoreditch. The move is due not to the generous inherent nature of bankers but from the expectation that by attracting multiple up and coming firms to its doorsteps, the financial institutions of E14 will be able to provide funding to SMEs while reaping the benefits of those that hit the big time.

The potential of allowing businesses to grow together in close location has been identified and copied by Canary Wharf as they look to gain similar success. The government has earmarked the IT industry as an area ripe for investment, providing tax incentives and low interest loans to kick-start business growth and economic recovery.

Outsourcing and shared services benefit from the same ideas. Proximity of similar businesses allows mutual benefit in attracting creative minds to within the area, sharing resources, in stimulating ideas by likeminded individuals and facilitating cooperation and communication.

Attractive offshoring destinations, such as India and China present complications. Both countries are far out of UK time zones, collaboration can be is hindered by visa requirements and expensive and long flights can make the prospect of direct contact costly.

Offshoring can be heavily hindered by the lack of a localised relationship. With recent research pointing to an expected downturn in offshoring over the coming years coupled with the strong public opposition and negative press to the practice, ‘local sourcing’ represents a stronger choice.

Outsourcing between businesses in close proximity or ‘local sourcing’, allows for flexibility from project approaches to adapting to rapidly moving developments. Outsourcing projects including such examples as Capita’s emergency contact centre contracts, Hampshire local authorities shared IT services and IBM’s program to develop high performance computing in the UK have all benefited from having a company presence in close proximity to that of their business partners .

Outsourcing by companies in proximity to their new service providers enjoy the benefits of cooperation and communication. Even in a world of globalisation facilitated through communications technology, where software such as Skype makes long distance communication free and simple, the benefit of gaining proximity in outsourcing is apparent in facilitating trust, avoiding cultural miscommunication and in rapidly resolving of obstacles.

While some times long distance relationships work out and can bring mutual success, e.g Calvin Harris and Dizzee Rascal collaborating while in different countries, the best examples come from the likes of the Osmond brothers, where it becomes clear that outsourcing like the Osmonds works best in close proximity.

The Education and Skills Commission has warned against Michael Gove’s proposed changes to changes to ICT curriculum in school. The commission, comprised of some of the UK’s IT leaders, has warned that the proposals leave schools with the freedom to provide no ICT education until 2014.

The current ICT curriculum focuses on teaching students to use software applications, such as spreadsheets and presentations. Under Education Secretary Michael Gove’s proposals, the current teaching programme will be scrapped from September and replaced with a new programme from 2014. The new curriculum will focus on computer science and programming.

The move was praised by IT industry at the time, but there are now concerns that there will be no compulsory ICT education in schools for two years.

John Harris, Chairman of the Commision said: "We are very concerned that the absence of a programme of study or attainment targets for any period of time will severely disadvantage large groups of children as a result of significant differences in standards between the schools that put in place good quality replacements and those that do the bare minimum or, in the absence of guidance, nothing at all. In other words we strongly believe that something is better than nothing and while the school curriculum content needs to change to prepare young people for study in IT related subjects at university, there should be no disapplication ahead of substitution."

Fujitsu has announced the launch of its first data centre in China. Located in the Guangdong High-Tech Service Zone for Financial Institutions, it will become South China's first Tier 3 plus data centre.

The high-performance, fully outfitted data centre will provide Fujitsu customers with comprehensive data centre services, with targeted system planning, system design, system architecture and system application.

Masayuki Tomimuro, Fujitsu’s Regional CEO of China, said, "As the world's third largest IT services provider, Fujitsu has a proud history in the design, construction and operation of intelligent data centres as well as data centre technology innovation. Fujitsu data centres around the world follow a unified certification system and operating standard. Backed up by 15 years of experience in global data centre services, Fujitsu is well positioned to provide world-class, green data centre expertise for clients seeking a flexible selection of services for their critical business data assets."

SAP has announced plans to acquire Syclo, a leading provider of enterprise mobile applications and technologies. The move comes as SAP looks to increase its expertise in building and selling mobile solutions in industries such as utilities, oil & gas, life sciences and manufacturing.

The acquisition follows that of Sybase in 2010, and adds to SAP’s existing mobile enablement portfolio. Syclo has around 750 customers, including Coca Cola and Lockheed Martin.

"With this acquisition, SAP adds momentum to our already powerful mobile portfolio, advancing our vision and leadership while accelerating our mobile apps," said Sanjay Poonen, president, Global Solutions, SAP. " Syclo brings both domain-savvy expertise and industry-leading solutions, as recognized by customers and analysts. This will drive innovation and mobility in the workplace."

Apple stock prices exceeded the $600 billion mark on Wednesday, only a month after reaching $500 billion. The only other company to reach the $600 billion mark was Microsoft in 1999, which is now valued at $260 billion.

The rise in value is particularly significant as stocks continued to fall on the main exchanges due to high US unemployment and the European debt crisis. The stock price peaked at $644 in the morning and stabilised at $629 by midday.

It has been speculated that the surge in value is down to Apple’s recent announcement that it will be using $200 billion pay a dividend and buy back some shares. Apple’s stock price has climbed 59 percent this year and a range of analysts have even said the stock has been under-valued by the market.

Tower Hamlets Council has awarded a seven-year contract to IT firm Agilisys. The move comes as Tower Hamlets aims to achieve savings of £100 million over four years following government budget cuts.

The contract, worth £70 million, hopes to save the council £29 million in ICT cost savings. Agilisys also implement the council’s new finance and HR systems. The IT firm will be based in Tower Hamlets and none of the council’s current IT staff will lose their jobs as they will be transferred to Agilisys for the duration of the contract.

Georgina O'Toole, TechMarketView analyst said: "Previously Agilisys has worked with Unit4 for its Agresso software, for example, at North Somerset. And word on the street is that it's the same situation at Tower Hamlets. Agilisys is quickly becoming one of the most successful players in the sector with revenues from UK local government set to top £100 million in this financial year to 31 March 2012."

Agilisys will start work at the council from May 2012. It beat Capita, HCL, Logica and Northgate in the race for the contract.

London's Tower Hamlets Council has signed a £70 million deal with services firm Agilsys in an effort to enable ICT to deliver its share of the savings - and create new local jobs.

The seven-year strategic partnership deal with Agilisys is expected to generate more than £29 million in ICT cost savings. Agilsys will implement the council's new finance and HR systems, as well as support its transformation programme.

The deal comes as part of efforts to combat the need to make £100 million of cuts over four years.

The council insisted that the IT team's employment terms and conditions will be fully protected, and that they will also have a no compulsory redundancy guarantee.

BT Global Services has won a $220m outsourcing deal with mining giant Anglo American.

The IT services contract covers all of the company's networking requirements in numerous locations 9many of them remote), across 15 countries, for the next five years.

The entirety of Anglo American's voice services will be moved to BT's One Voice converged communications platform, which will enable collaborative services such as IP telephony and videoconferencing to be deployed. BT will also become Anglo American's "global supplier of choice" for networking hardware equipment.

The deal follows on from a 2007 outsourcing contract with BT in alliance with HP, which also covered IT hardware supplied by HP.

Hacktivist group Anonymous has targeted the home Office, Number 10 and Ministry of Justice websites in protest of the extradition of alleged UK hackers to the US.

Anonymous claimed responsibility for the Denial-of-Service attacks this weekend, rendering the sites useless for over an hour. Twitter accounts affiliated with Anonymous hinted that the attacks came as a protest against the extradition Gary MacKinnon, who stands accused of hacking into the Pentagon's IT systems, and Richard O'Dwyer, who allegedly operated an illegal download link directory site, to the US.

The success of the attacks raises questions as to why the sites were so susceptible to hacking.