Magazine. Vol. 09, Winter 2010.
Patrick Vandenberghe “IT is an enabler for value” 4
Enzo Bertolini “Support of CEO was essential” 7 & 14
Marie-Noëlle Gibon “Getting the right person at the right place” 8
Mark Foulsham “I need strong people” 10
Editorial: Role of the IT department in the last decade IT Leadership in the New Economy Role of the Top Management in Ferrero’s IT investments Managing human IT capital The CIO as a business gladiator CIOnet Spain’s Annual Event looks ahead at 2020 The strategic role of Demand Management Increasing need for IT security against new cyber crime IT is a People Business The New Business Relevance Column: Beyond Information The Future of ERP CIOs shed their light on ERP How to deal with Performance Management? Corporate IT for Generation Y
3 4 7 8 10 12 14 17 18 20 24 26 28 30 31
José María Tavera “No predefined path towards the future” 12
IT Leadership About CIOnet Magazine
CIOnet Magazine is a CIOnet initiative sent directly to CIOnet members and as a supplement to Data News. Produced by: Roularta Custom Media Publishing Director: Hendrik Deckers (firstname.lastname@example.org) Editorial coordinator: Kurt Focquaert (email@example.com) Photographs by: Jan Locus Printed by: Roularta Printing Advertising: Erwin Van den Brande (firstname.lastname@example.org)
P remium business PARTNERs business PARTNERS
The last six months have been great for CIOnet. We have seen an impressive growth in numbers and now count more than 2000 members in six countries with a target to grow to a network of 3500 IT leaders in Europe by the end of 2011. More than 60 business partners have joined our community, as well as a series of new network and research partners.
It is my pleasure to announce that on 24 and 25 March 2011 we will host our first international event called CIO CITY (www.ciocity.com). During this interactive and inspiring conference three gurus will work with you on (IT) leadership’s skills. We will also – in corporation with INSEAD – hand out the first awards for the European CIOs of the Year.
On the activity side I was really impressed by the first networking events in France (on IT Talent Management) and Italy (on Demand Management) as by the annual events in the UK, Spain, The Netherlands and Belgium, that all looked forward on how IT leaders can grasp the opportunities of cloud computing and Social Media and manage the challenges offered by the digital natives and the recent economic recovery.
I hope you will enjoy reading this ninth issue of CIOnet Magazine and I’m looking forward to seeing you all in Brussels in spring 2011! Best regards, HENDRIK DECKERS MD CIOnet email@example.com
2000-2010: whatâ€™s up?
wo major crises characterised the last decade: the dot-com bubble burst and the subprime mortgage crisis. Obviously, these affected IT departments as much as other corporate departments, although with some important differences. Ten years ago, a crisis usually meant budget cuts, the IT department still being considered a cost centre. Since then, the IT department has increasingly become a foundation of the enterprise. This resulted in a shift in IT staffing: the IT department is now also attracting business profiles that serve as an interface between information technology and business processes. The IT department is transforming into a horizontal organisation across the company. Furthermore, far from being just a viral marketing tool, the social media eruption brings new ways of communicating across various departments, creating new relationships and informal hierarchical structures. Here the IT department is not just a commodity provider, but the driving force of change. In this ongoing transformation, talent management and intangible asset valuations are key to a companyâ€™s excellence. CIOnet France was founded a few months ago as a platform for CIOs to have better access to information, network with their peers and take the strategic place in the company they deserve. The first Advisory Board of the French entity decided to give high priority to these strategic and organisational subjects. In November, our first seminar was therefore dedicated to IT Talent Management and the next one will discuss Social Media. We will continue working on these points after the seminars within dedicated Special Interest Groups. We hope that these initiatives will be of interest to our peers across Europe. CIOnet France looks forward to sharing and contributing to the development and success of the European CIO community.
General Manager CIOnet France
IT Leadership in the New Economy Since the financial-economic crisis, we have been living in a New Economy with new rules. What role is in store for IT leadership in the New Economy? That was the central question during CIOnet Belgium’s fifth annual event. > PICTURE
Patrick Vandenberghe, Global CIO with ArcelorMittal: “IT will not redraw the business side, but it does make a substantial contribution.” < PICTURE
Ivan Van de Cloot, Chief Economist with the Itinera Institute: “Europe is still innovating less than the US and Japan. We ought to pay more attention to that.” PICTURE
Stijn Viaene, professor at the Vlerick Leuven Ghent Management School: “The CIO has a foot in the door at C-level, at least if IT is operationally excellent.”
e are indeed living in turbulent times”, said Ivan Van de Cloot, Chief Economist with the independent economic think tank Itinera Institute. “We must therefore turn our attention to the things that can ensure sustainable economic growth. Technology plays an essential role in this.” Economic growth, and its associated prosperity, is actually a relatively recent phenomenon that has only existed for a few hundred years. How can we once again achieve economic growth during the recovery period following the crisis? Countries like China and India are creating growth by deploying ever more production resources. Europe is long past that stage. “It comes down to using the available production factors as efficiently as possible and to being innovative”, said Van de Cloot. “IT can help us here. In fact Europe is still innovating less than the US and Japan. We ought to
pay more attention to that.” IT can help make a difference in the long term. For that reason, Van de Cloot advises CIOs to work according to that long term, paying special attention to infrastructure development, but also to improved risk management and increased IT intelligence. A genuine leader Now that we are in a recovery period, CIOs are being presented with a great opportunity. “The CIO finally has a foot in the door at the C-level”, says Stijn Viaene, professor at the Vlerick Leuven Ghent Management School. A study by Vlerick and Deloitte confirms this. “It is therefore important for the CIO to speak a language that the CEO and CFO can also understand. A CIO must be a genuine leader, who thinks strategically and weighs in on his company’s decisions.” At the same time, the crisis has brought the CIO back down to earth. This has pushed innovation farther into the background again, as the emphasis started to return to the operational side. “These days, a CIO must first be able to demonstrate that his company’s IT is operationally excellent”, says Viaene. It is important for a CIO to keep a firm finger on the pulse. “We are increasingly seeing IT initiatives arise on the business side in which the IT department is not involved.” These often relate to services that the business brings in via a so-called stealth cloud, out of sight of the CIO. Within a coherent IT policy, there is obviously no room for that. Maintaining good relations with the business side and a clear overview of IT needs can keep the risk of the stealth cloud at bay.
Jerry Luftman, professor at the Stevens Institute of Technology: “Business issues feature on top of the CIO’s list.” PICTURE
Guy Dehond, CEO of Inventive Designers: “It is important to find the right balance between creativity and management. Yet it is certainly the entrepreneurship that predominates.”
Is Europe falling behind? “The recession may be officially said to be over, but the economy is still in bad shape”, agreed Luftman, professor at the Stevens Institute of Technology in New Jersey. “We are still far from being back at the level of before the crisis.” Luftman formulated useful tips on what European CIOs can do to reverse the situation on the basis of the annual study by the Society for Information Management. Every year since 1980, the study has been polling a worldwide panel of CIOs and so gives a good overview of CIOs’ evolving visions and priorities. “The crisis has once again demonstrated the resilience of IT”, says Luftman. “IT is gradually starting to progress again. From next year on, we will see increased spending on IT projects and IT pay. Offshoring will resume its growth too.” Business issues feature prominently on the CIO’s main focus points. IT needs to increase business productivity and reduce its costs. At the same time, IT must support the management and improvement of business processes. “What is also striking is that after all these years business and IT alignment still feature so highly on the list of controversial issues”, says Luftman. In terms of technology, a European CIO’s attention tends towards ERP, BI and cloud computing. BI takes top place in the US, while in Asia and Australia the cloud receives most attention. We see differences in budget allocation too. In 2011, European CIOs will be spending only 3% of their budget
on training. In the US, it is 4%, in Asia around 6.3%. “In order to prepare itself more adequately for the revival in the economy, Europe will need to invest more in training.” There are also differences in total IT expenditure. A European company spends on average 3.6% of its turnover on IT. In Asia, it is 5.8%. “Here, too, Europe is likely to fall behind.” The right balance Clearly, in the New Economy, a CIO must continue to pay adequate attention to innovation. Guy Dehond, CEO of Inventive Designers, shares that feeling. At the annual CIOnet event in Brussels, he had the honour of receiving the CIOnet Innovation Award. “A business is always the result of entrepreneurship and innovation”, says Guy Dehond. “It is important to find the right balance between creativity and management. Yet it is certainly the entrepreneurship that predominates. I therefore see myself more as a businessman who innovates rather than the other way round.” Dehond thinks that companies should not exert too much control on the creative process, or unnecessarily increase time constraints and should guard against an abundance of ideas. “Don’t innovate for the future,” continues Guy Dehond, “but for today.” The question remains if IT can reshape the business? Patrick Vandenberghe, Global CIO with steel giant ArcelorMittal thinks not yet. “True, IT is already able to make a substantial contribution.” Vandenberghe explains how the crisis hit ArcelorMittal hard. Its sales fell by half. “Following the merger of Arcelor and Mittal Steel, we were fully involved in an IT transformation project. We had already finalised considerable cost optimisation when the crisis broke out.” In 2009, ArcelorMittal decided to stop all ongoing business projects immediately. “Reducing costs was the main priority”, says Vandenberghe. “This allowed us to place IT on the group management board’s agenda.” ArcelorMittal scrapped no less than 35% of its IT costs. “Obviously you cannot just go on cutting forever. Step by step therefore, we are now starting up the transformation project again, with IT genuinely positioned as an enabler for value. The true value of IT lies in fast, reliable and consistent information integration, to support real-time decision making at all levels, operational, tactical and strategic.”
Their support is crucial in the choice of IT investment
Top management and IT The growing demand for IT investment led Ferrero Group to set up an ‘IT Investment Committee’ to assess the IT project portfolio and set priorities on attainable goals.
he CEO of Ferrero Group was central in implementing IT project portfolio assessment. The issue of how to assess and prioritise IT investment became particularly pressing in 20032004 with the challenge of implementing a single ERP for the entire group. The growing demand for IT projects prompted the Ferrero board to think in terms of portfolio, fuelled by the demands of business and the technological tools available. It set up an ‘IT Investment Committee’ to head up a ‘mechanism’ to assess the project portfolio and define priorities for requests.
Once filtered, the portfolio of IT initiatives goes to the ‘IT Investment Committee’ for final decision. It is periodically updated to include new projects, upgrades or downgrades. Last year the ‘IT Investment Committee’ approved only 30% of the overall IT investment required by business. The results are satisfactory, especially if measured in relation to the business plan and the necessity to contain the entire Ferrero Group’s IT spending.
Enzo Bertolini, CIO Ferrero Group and part of the company’s ‘IT Investment Committee’, is satisfied with the overall IT spending: “Especially if measured in relation to the business plan and the necessity to contain the entire Ferrero Group’s IT spending.”
The growing demand for IT projects prompted the Ferrero board to think in terms of portfolio. The Committee is composed of the Director of Operations, CFO, CIO, human resources managers, the supply chain and geographical business units. The requests are classified into thematic project clusters (for example, compliance, operational, efficiency projects, etc.). They are then ranked according to four criteria defined by the Ferrero board: risk, cost, benefit and alignment with business priorities. Alignment A central team of senior IT and finance managers evaluates the requests. If the project is part of the IT portfolio, the team checks its compliance with the criteria of alignment with business priorities and planned organisational changes, risk profile at a standard level, consistency with IT budgets and sustainability according to available resources.
Key to fulfil demand
Managing human IT capital “In the IT world human resources are definitely the main assets. The value of human capital leads a company to either success or failure. Human capital encompasses knowledge, competence and know-how. Unfortunately today still too few companies are able to manage skills and knowledge as they would do with any other assets”, says Marie-Noëlle Gibon.
arie-Noëlle Gibon was a key contributor to the successful deployment of Groupe La Poste’s large IT transformation projects. One of her leading projects was the HR-oriented deployment of the information system. MarieNoëlle Gibon was, with INSEAD’s Bruno Lanvin, one of the speakers of the IT Talent Management seminar that took place in Paris last November. Accent on human assets Marie-Noëlle Gibon is strongly convinced of the
Marie-Noëlle Gibon CIOnet France Advisory Board President Marie-Noëlle Gibon joined Groupe La Poste (the French Mail) in 1996 where she fulfilled various roles such as CIO of the Parcel Division, before taking over as CIO of Groupe La Poste and CIO of the Mail Division. In 2008, MarieNoëlle Gibon was named Director, Innovation, Development and CIO of Docapost, Groupe La Poste’s corporate entity setting together solutions and documentation services. Marie-Noëlle Gibon is the co-author of ‘Improve the Information System Management: Management through restricted value destruction’, published by Dunod in January 2010. She is also heading the eSCM association for the promotion of the sourcing best practices guide developed by ITsqc (IT services quality centre) of the Carnegie Mellon University.
usefulness and necessity of developing a strong, open and active CIO community. “In this respect, I am happy to contribute to CIOnet France that started a few months ago. Discussing with my peers it appears clearly that such a community should encourage sharing ideas and experiences on the most structural and strategic issues CIOs have to face. It is therefore no surprise that CIOnet France chose IT Talent Management and Social Media as themes for its first two seminars. It is also
obvious that the strength of a company is tightly connected to the quality of its non-material assets. In this context companies have to emphasise human, information and organisation assets, as Norton and Kaplan would demonstrate in the second volume of their Balanced S c o recard trilogy.”
‘The strength of a company is tightly connected to the quality of its non-material assets.’ The ‘Poste’ project The project of Groupe La Poste was based on the referential database of CIGREF (Top 100 French accounts Association) together with the ABC methodology for analytical accounting. The objective was to assure a better control over costs, a prerequisite to the internal invoicing of the company’s services. This step was part of an overall estimation process of the non-material IT assets carried out using the ICdVal (Intellectual Capital dynamic Value) methodology. In conjunction with this evaluation process, Gibon rolled out a Management System of Value Destruction backed up by a risk management methodology resulting from the company’s use of information systems (MRB: Management of Business Risks). This way the company could take appropriate measures. At the end in 2006, Groupe La Poste deployed business referential databases such as CMMI, COBIT (mainly PO), ITIL (itSMF Grande Entreprise 2008 prize) as well as eSCM. The quest for competence This project strengthened Marie-Noëlle Gibon in her conviction that the number one priority of most CIOs is getting the right person at the right place. “This is not an easy task because of three
reasons. Technology cycles are accelerating. They are in fact getting quite shorter, making both individual and collective talent one of the key challenges of the next decade. IT employment will face hard times as a result of both a restricted interest of the younger population and the scarcity of requested profiles while the demand remains high. This will even be the case while outsourcing tries to solve the lack of expertise. In the meantime, maintaining the expertise level of the teams remains important at a time when careers are getting longer. Having well-trained, highly skilled and motivated teams is key to fulfil demand and to meet expected performance.” Attracting external skills “If we regard talent as a person including his know-how and capabilities – as we consider talent as one of many assets for the company – the joint between talent and human asset will become obvious. This innovative approach makes it clear: talent is just like any other asset: it has to be developed to avoid depreciation. This is how a CIO will be able to retain talent while giving sense to careers. This is also how a CIO can attract external skills.”
‘Ordinary people doing the most extraordinary things.’ According to Gibon, talent development can only be obtained through efficient career management, qualified trainings, anticipated jobs and skills evolution (GPEC). It is all about GPEC best practice implementation to make talent arise. As Peter Drucker said it so well: “The raison d’être of a company is to allow ordinary people to do the most extraordinary things.”
A man with fingers in many pies
The business gladiator Esure head of IT Mark Foulsham says his can-do approach helps guarantee technology implementations match business objectives.
T is often seen by the business as a function that says ‘no’ too much”, says Mark Foulsham, head of IT at insurance firm esure. “Let’s say ‘yes’ first and then work from that premise.” That approach to business technology filters through every aspect of Foulsham’s work, from his management of in-house IT to his influence in a broad range of expert advisory services. Foulsham is a man with fingers in many pies. And the flavour of the pie – in-house, external, non-IT – depends on the wider, business objectives. His wide remit has led to Foulsham being given the nickname Emperor. Such is the gravitas associated to his status that Foulsham – half self-mockingly, half as an inspirational call – has a quote on his door from the gladiator Marcus Aurelius: “Because a thing seems difficult for you, do not think it impossible for anyone to accomplish.” Can-do attitude The sentiment provides appropriate shorthand for Foulsham’s can-do attitude. A civil engineer by education, Foulsham’s first job after graduation was with design specialist WS Atkins. His work involved responsibility for IT from day one, with Foulsham quickly shown the firm’s Unix boxes and asked to take control. “I’ve always thought that civil engineering provides a great training ground for the management of resources”, he says. “As an engineer, you turn up and fix down the variables. All the skills I’ve gained through engineering have been used in IT.” After six years at WS Atkins, Foulsham took his IT skills to French construction and services giant Bouygues as a programme manager and subsequently IT director. “They were interesting days”,
says Foulsham, reflecting on his multiple roles and responsibilities. “The company worked across a range of components, such as water, civil engineering and facilities management. Working in the UK for a centralised IT function of a French business created an interesting situation.”
‘It is often seen as a function that says no too much.’ After eight years, certain parts of the business were divested, including the European IT function. After presenting to the City, Foulsham helped bed-in technology as IT director of Macquarie Bank’s infrastructure fund. He became head of IT at esure a year later in 2004. “It was very different to anything I’d done before”, he says, reflecting on his move to the financial services sector. “I came for an interview here and the view from esure then, as now, is that it’s good to think objectively and out of the box – so limited knowledge on the industry is not a barrier.” More work Objectivity for Foulsham involves a series of changing responsibilities, both in regards to business and project aims. “I keep being given more work”, he reflects. “In short, I think it’s because I recognised pretty quickly that I work for esure chairman Peter Wood, not the company.” After launching Direct Line in the 1980s, Wood founded esure in 2000, using the Internet as the
company’s key sales channel. The company grew quickly, including the successful creation of female insurance brand Sheilas’ Wheels. Wood recently led a management buy-out of esure from Lloyds Banking Group. Wood and his senior colleagues, like Foulsham, continue to drive innovative projects (see box). In addition to his daily responsibilities at esure, Foulsham is heavily involved in online comparison site GoCompare.com. He works in a consultancy role alongside the IT director, helping to ensure the firm does not make mistakes in regards to architecture planning. Foulsham’s consultancy work extends to cloud computing specialist Cobweb Solutions. As non-executive director, he provides IT leadership experience and connections. “A lot of CIOs still don’t get the cloud and there’s potentially some real value. I help by giving Cobweb an objective perspective of the challenges CIOs face.” Strong people His close interaction with Peter Wood and his diverse consultancy interests means Foulsham needs to rely on a strong IT team at esure. Because of such reliance, he is sensible enough not to be concerned about letting go of responsibility. “When I interview people, I always ask whether they aspire to take my role”, he says. “I need strong people and I always need a single point of contact. Having people you can trust makes the job easier. Modern IT leaders must utilise their existing human resources. If you have great people, you can let their light shine and that gives me more opportunity to think strategically.”
Mark Foulsham, head of IT with esure: “A lot of CIOs still don’t get the cloud and there’s potentially some real value.”
Driving change Foulsham’s strategic role has taken on a wide business remit during the last few years, with the IT chief providing a group service for the change management of all IT and non-IT projects. “It’s a functional responsibility”, he explains. As an example on the technology side, change has involved a considerable two-year programme of website refreshes. The front end is all-important for a web-based insurance business and Foulsham is keen to point out that function is far more important than appearance. “In a real business, people don’t want fancy, they want function”, he says. “Keep everything practical and engage with the business. There’s always something to improve.” When it comes to IT-led transformation, Foulsham has engaged the smart use of web services technology to help the business deploy changes in real time. “In this market, you have to be innovative. Launching a new business like Sheilas’ Wheels would normally take at least a year; with our flexible technology, we were able to launch in six months”, he says. “At the end of the day, you’ve got to use technology to create business benefits and you’ve got to receive income as quickly as possible. Get your approach to technology right and your people will get the right solutions.”
Preparing a good cocktail Beyond any doubt SIMO is the place to be to outline the history of information systems and telecommunications in Spain. Conceived somewhere back in the sixties as the equipment and office furniture trade fair, this meeting has grown during the last two decades to a paradigm of evolution and change.
José Manuel Inchausti, Mapfre’s CIO: “The Internet’s future will be built on web 2.0.”
n the one hand, it seems that we are far away from certain milestones that took place at SIMO. Think of the introduction of the 486 microprocessor in 1992, the year of the Spanish Olympics in Barcelona and Seville’s Expo. Consequently, celebrating CIOnet Spain Annual Congress at SIMO always is the perfect symbiosis between tradition and modernity, innovation and experience, past and future. If we consider that SIMO has progressively been focusing its activity on networking – that’s why the event was renamed to SIMO Network since 2009 – and its condition of meeting point for IT’s main executives.
José María Tavera, Acciona’s CIO: “The relationships between customers and suppliers need to be strengthened.”
Engine for next decades’ growth CIOnet Spain Annual Congress, celebrated last October, acknowledged the importance of making a wink to the future. This is the place where
we try to shape the ten year perspective in a series of lectures and round tables. In a society that is facing significant challenges there is an urgent need to build up a new economic model. The model will be the engine for next decades’ growth. More than 100 executives attended the congress that started with a warm welcome from Mona Biegstraaten, our Managing Director for Spain. Mona pointed out the key objectives for the event and of course expressed her gratitude and pride for the extraordinary growth and success of CIOnet’s Spanish community. The strong growth of the industry will provoke more mass storage capacity. According to Roberto Parra, President of CIOnet Spain and Repsol’s CIO we will need 40 times more storage than the actual capacity. Following his words, Juan Junquera, IT’s General Manager for the Ministry of Industry, Tourism and Trade, pointed up the clear bet in this area by the public administrations, promoting innovation, and funding, through ‘Plan Avanza’. The plan will launch new initiatives that pursue a higher efficiency for the companies and the economy as a whole. No predefined path towards the future The first block of lecturers dealt with the topic ‘Towards a more intelligent society, IT’s role’. The round table was moderated by José María Tavera. This member of CIOnet’s Advisory Board and Acciona’s CIO underlined that there is no predefined path towards the future. He emphasised the need for strengthening the relationships between customers and suppliers, and highlighted the importance of fine-tuning the role of CIOs in this context. This round table was composed
by Idoia Maguregui, Bankinter’s CIO; Araceli García, Vodafone’s CIO; José de Rafael, Managing Director for the Spanish Association of Consulting Firms (AEC) and David Soto, IBM Global Business Services Manager for Spain and Portugal. All participants agreed on the importance of developing the practical side of some concepts that will illustrate the future, with cloud computing as the main topic. Idoia Maguregui mentioned some restrictions for its adoption in the financial institutions. She pointed out that innovation is the only way to open new markets, to improve the security in the transactions and to optimise the relationship with customers. Araceli García mentioned how CIOs need to give response to the more difficult balance between different variables: innovation, cost, efficiency and productivity. She also enumerated the challenges we shall face in the telecommunication industry, such as the ultra-mobility, broadband networks and the convergence between the different network devices.
‘Innovation is the only way to open new markets.’ Internet as a value enabler The second round focused on ‘Internet as a value enabler’. This topic was moderated by José Manuel Inchausti, Mapfre’s CIO and member of CIOnet Spain’s Advisory Board. He mentioned a series of articles that illustrated a contradictory vision for the upcoming years and the need to choose the profitable path. He emphasised that Internet’s future will be built on web 2.0, its usage and its requirements: bandwidth, application tools and neutrality. Sebastian Muriel, General Manager of Red.es, underlined that the changes driven by Internet will depend on the social nature, even more than
on any technical considerations. Internet represents nowadays a deep social change which enforces companies to put the end user at the centre of their strategy. In this sense, he continued, Spain has a good starting point, since it has the fifth place in the list of countries that use social websites. Sebastian also mentioned some interesting news that indicate the trends of the near future such as Amazon’s acquisition of BuyVIP, a Spanish online outlet, or Facebook’s business model as an e-commerce platform. Luis Lada, former President of Telefonica Mobile, mentioned the importance of recognising transparency and discrimination in the polemic on network neutrality. Enrique Solbes, Vice President of Sales for HP Enterprise Business, expressed that Internet allows new business opportunities, although the main challenge is to build a profitable business model from which all parties – suppliers, customers and users – can benefit. Integrating role Joaquín Coronado, PwC’s Managing Partner for Business Consulting, focused on the CIO’s integrating role. The CIO is responsible for the company results and not just for his own department. He mentioned the four basic knowledge elements that will be needed in this function: innovation, risk management, cost efficiency and company’s governance. The event ended up with a remarkable intervention of Rubén Turienzo about social influence, as the basis for CIO’s necessary leadership. Through the metaphor of preparing a good cocktail, he mentioned how different ingredients should be combined in a way that can help us succeed in our objectives. After this session all participants had some spare time for networking, enjoying some wonderful tapas and the rhythm of a jazz band.
Demand Management today
More strategic than ever before Over the years, the increased ability of IT departments to work with formal processes and data has produced an evolved model of Demand Management. This model shows the capacity to align IT with business needs. It was the topic debated at CIOnet Italy’s first event.
Alfredo Gatti, Managing Director of CIOnet Italia: “Three parameters to judge IT’s value.” PICTURE
Francesco Nicastro, CIO Coesia Group: “Managing the workload of IT resources is strategic.” > PICTURE
Paolo Magnani, Vice President IT, DHL Supply Chain: “IT is not a mere performer.”
T Governance has always been a priority theme for market leaders. If focusing on IT activities capable of creating business value is indeed the primary objective of Governance, then Demand Management becomes the practice of streamlining the business request process and a mandatory step in assigning priorities. To give an idea of the centrality and timeliness of the topic, Alfredo Gatti, Managing Director of CIOnet Italia introduced two questions: How do we know if our IT will be successful in the near future? What are the best KPIs for measuring IT?
Paolo Pasini, a professor at SDA Bocconi, declared: “Demand Management is at the heart of lively debate in companies and academic circles.” “A Demand Manager does not only need good knowledge of business processes”, says Pasini. “A new aspect to focus on is a Demand Manager’s ability to manage relationships.”
Manage relationships “Three parameters should be used to judge IT’s value”, says Alfredo Gatti. “IT’s productivity and contribution to business productivity, IT’s alignment to the business and IT’s connection with the business innovation process.” Well, directly or indirectly, Demand Management has an impact on all three fronts. It is therefore no surprise that
Senior management support at Ferrero The issue of Demand Management and prioritising IT investment became particularly pressing in 2003-2004. In those years, Ferrero decided to adopt a single ERP for the entire group to enable the best practices of individual functional areas to be exported and adopted as best practices for the Group.
‘Demand Management is at the heart of lively debate in companies.’
“Thanks to the essential support of the CEO of Ferrero, we began to think in terms of portfolio, fuelled by the demands of business and th e te c h n o l o g i c a l to o l s ava i l a b l e”, s ay s Enzo Bertolini, CIO Ferrero Group. “We set up an ‘IT Investment Committee’ to head up a ‘mechanism’ to assess the project portfolio and define priorities for requests. Last year the ‘IT Investment Committee’ approved 30% of IT investment required by business”, says Enzo Bertolini. “The results are satisfactory, especially when considered and measured in relation to the business plan for containing the entire Ferrero Group’s IT spending.”
“In our company”, says Francesco Nicastro, CIO Coesia Group “a process is underway to restructure and centralise key functions at group level.” Coesia Group comprises 38 companies operating in Italy, France, Germany, Spain, Sweden, Switzerland, USA, Brazil, China, and 13 branches providing sales and after-sales service in major countries. “Last year 75% of IT investment requests were developed internally based on custom requirements”, says Francesco Nicastro. “Demand Management is a strategic practice for focusing on the higher added-value requests for IT investment and managing the workload of IT resources.”
IT’s authority and leadership “The role of the Demand Manager needs to be maintained”, says Adriano Riboni, CIO of Sanofi Aventis. “We have set up a front line team that knows the processes and understands the business problems.” This enables IT to be recognised in its role and tackles any attempted ‘abuse’ by the business side.
Consensus plus authority and leadership are key factors in ‘protecting’ the CIO and IT from internal ‘political’ conflicts and demarcation disputes. “Moreover,” says Paolo Magnani, Vice President IT, DHL Supply Chain, “in the context of change management, it is worth highlighting the need to assume a role that will be the more successful the more it is able to build consensus around IT’s own initiatives.” Consensus plus authority and leadership are key factors in ‘protecting’ the CIO and IT from internal ‘political’ conflicts and demarcation disputes. It will also avoid the risk of IT being marginalised to a role of mere performers.
CIOnet Italy’s first event CIOnet Italy’s first event was held last October in Milan at the prestigious offices of SAS Italia. Keynote speakers were Paolo Pasini (Professor SDA Bocconi), Enzo Bertolini (CIO Ferrero Group), Paolo Magnani (Vice President IT, DHL Supply Chain Italy), Francesco Nicastro (CIO Coesia Group). Special guest was Stefano Sandrelli (Astrophysicist, INAF Brera).
Cyber crime is changing rapidly
Anticipate your own 9/11 Cyber crime is big business. Although awareness about the need for IT security is increasing, still daily practice often lags behind.
s the nature of the risks has evolved over the years, the significance of cyber crime has changed as well. “We have been approaching security in the wrong way for a long time”, says Larry Clinton, CEO of the Internet Security Alliance. “We cannot solve the problem with technology alone. Companies need a genuine security policy.” The ideal conditions In recent years, cyber crime has become highly professionalised. Today, cyber attackers aim at monetary gain. Larry Clinton: “What is more, cyber criminals are enjoying ideal con ditions. The investment and chance of being caught are minimal, while the gain couldn’t be higher. On the other hand, protecting against attacks is very costly.” Yet there is good news. 94% of all cyber security incidents could be avoided using conventional, affordable standard solutions. We do in fact have a very good idea of what we need to do, it’s just that we are not doing it. More attention at employee level would be a step in the right direction, with clarity about sanctions for insecure conduct and so on…
Among other things, the advent of the Internet has changed the way we go about our banking. To the average consumer, Internet banking is second nature these days. “We never look at security separately from the business”, says Jan Raes, IT Security Officer at Dexia Bank. “At the same time, we realise that a world with zero risk does not exist. Therefore, we too have to tolerate a certain risk. But if things do threaten to go wrong, we counter the threat with the right preparations.” Cards on the table Luc Beirens, head of the Federal Computer Crime Unit in Belgium, cannot conceive how our whole society depends on vulnerable IT. “Are you waiting for a personal kind of 9/11 for IT, before you assess the need for IT security? In one company, an employee posted the complete database with the results of years of research and development on the Internet. Such a loss is virtually impossible to calculate. There should be a clear policy for staff that has access to sensitive information. At the same time, we ask companies to put all their cards on the table. The better we can map cyber crime, the better we can act. Nowadays, companies tend to keep the lid on incidents.”
Larry Clinton, CEO of the Internet Security Alliance: “We cannot solve the security problem with technology alone.” PICTURE
Jan Raes, IT Security Officer at Dexia Bank: “We never look at security separately from the business.” > PICTURE
Luc Beirens, head of the Federal Computer Crime Unit in Belgium: “The better we can map cyber crime, the better we can act.”
IT is not about technology
People business “Technology-driven projects will not work without stakeholder contribution”, says Orange Business Services CIO Vincent Kelly. Avanade CIO Chris Miller shares this view: “Communication is crucial with respect to supporting the business.”
eople like me live on adrenalin”, says Vincent Kelly, CIO at Orange Business Services. “I love the change associated to working in a realtime business like telecoms.” With a coffee to feed the adrenalin, Kelly meets CIOnet Magazine at a café near the Royal Festival Hall on London’s South Bank. The location is convenient for Kelly, a man that is just about to take a Eurostar train from the nearby station. Being CIO of a French business means Kelly spends a fair amount of time commuting between the cross-Channel capitals. He estimates he spends as much as two thirds of his time in Paris but the London-based Irishman is more than happy to split his time for the job he loves. Kelly has two major roles: running technology for internal IT users; evolving IT to provide new offers for external customers. Like so many of his CIO peers at leading IT firms, Kelly spends much of his time eating his own dog food and drinking his own champagne – in other words, rolling out technology that has been tried and tested internally. Very transparent “Eating the cake you bake”, offers Kelly, as another alternative to the well-used metaphor. “I’d be killed if I didn’t do that.” Such extreme actions are, thankfully, not required. Kelly says IT spend is closely monitored and that IT is responsible for just 3.2% of the company’s budget, a remarkably low proportion for a telecoms business. “We’re very transparent”, he says. “As much as possible, we want the business team to know what we’re doing. If you delay a project roll-out, you can delay business growth. We work with the business to get different projects to market. If the business really wants something new,
we might need to look at different areas, like automation, that can help push fast delivery to the customer.” He gives an example of the kind of project that has helped produce business benefits. Kelly moved a series of servers and networks to internal customer service, meaning his department’s support of operations became the service desk’s second largest customer. “The interesting part of my job is that I support business”, he says. “We use technology to support operations, such as billing and provisioning. Our aim is to intercept and resolve issues before the customer is interrupted.” Last year, external service priorities were dominated by video and the need to provide different kinds of services across a range of devices and networks. This year, customers are mainly talking about cloud. The focus means Kelly and his team must find ways to offer secure and flexible ondemand services. When it comes to internal customers, priorities are mainly centred on quality of service. Key programmes include back-office applications, customer service technology, agile IT and process improvement. Empathetic Kelly – a father of two who spends much of his spare time split between Arsenal and Fulham Football Clubs – has a broad church of IT experience. After 17 years at Logica, Kelly took a number of IT leadership roles at dot-com organisations. The last of these start-ups eventually became part of Orange Business Services, allowing Kelly to lead business technology at the telecoms giant. And what he has learnt is that your team is
everything: “If you’re not listening, you’re missing out – IT is definitely a collaborative game. If someone on your team is ill, or their family member, you need to be prepared to say that they should ease back”, says Kelly. “You need to be empathetic and listen to your employees. People need to feedback and ensure that openness occurs. IT is a people business, it is not about technology.” Geared up “We’re thinking about what IT would look like if we were two or three times bigger”, says Avanade CIO Chris Miller, referring back to his recent appointment and looking forward to forthcoming chal lenges: “How do you position IT for the future?” After 16 years on the consultancy side with ser vices giant Accenture, Miller made the move to CIO of Avanade in January 2010. “Avanade is an interesting company”, he says, referring to lessons learnt during the first few months as a technology chief. “We have 10,000 employees globally that expect us to use the latest and greatest collaboration technologies. The opening provided an opportunity to be a CIO for a company that really values technology.” And it is an opportunity that Miller has enjoyed: “It’s been great, the depth and breadth of IT here is amazing and there’s a passion to drive the benefits to our customers. It’s not just about setting vision and strategy. There are some opportunities that are more operational, too. But I’m learning, and that’s part of the excitement.” One of his current priorities is the design and deployment of a new corporate intranet. The next generation collaborative platform is based on Microsoft SharePoint 2010: “We rely heavily on collaboration and we’re looking for a revolution through social technology.” Other priorities include business alignment, customer relationship management and real-time communication.
“Our strategy around cloud will also be crucial during the next 12 months”, says Miller. “Organisations think about cloud differently. For me, ondemand computing means that I can think about the value of business processes that run on top, rather than the plumbing underneath.” Miller also recognises that some CIOs are yet to be convinced by on demand. And security, he says, is likely to remain a concern: “Companies are still working that through and big businesses are looking for their concerns to be removed. People, understandably, want success. Yet the cloud will not solve all your problems; it’s not a cure-all pill.”
Vincent Kelly, CIO at Orange Business Services: “If you’re not listening, you’re missing out.” PICTURE
Chris Miller, Avanade CIO: “Our strategy around cloud will also be crucial during the next 12 months.”
New investments Miller reports to the chief operating officer and says the reporting line works well. “There’s a lot of communication with respect to supporting the business”, he says. “We use technology to ope rate the business. Our COO has a good grasp of the business and I get a lot of his time. And when needed, I also have to channel to the chief executive.” With regards to success for Avanade, Miller says managing new investments will be crucial: “We’re at an inflection point and we need to think about how we evolve our thinking and how we make sure we support growth and expand”, he says. “CIOs have an opportunity – the business is asking how we can invest in technology to capture opportunities going forwards. The pendulum is swinging towards how we manage our investment. We’re now in a position of having to get more from more – we’ve got money and we’ve got to invest it properly.”
The New Business Relevance
The Cloud Demystified Although the subject of the third Dutch CIOnet Annual Event was ‘The New Business Relevance’, one topic dominated most presentations… Guess what? The cloud. “Is the cloud really the magical wand?”, wondered keynote speaker Dr Daniel Lebeau. Love it or hate it, it soon became obvious that the cloud services approach is inevitable.
ast October CIOnet Netherlands celebrated its third annual event in the inspiring venue ‘Muziekgebouw aan ‘t IJ’ in Amsterdam. Goal of the event was, according to chairman Daniel Erasmus, “to search for The New Business Relevance or How could IT leaders thrive and succeed in a new role.” Embrace cloud computing Keynote speaker Dr Daniel Lebeau, Vice President Information Management Systems of GlaxoSmithKline, leaves little doubt that the future business relevance of the CIO himself will mainly depend on embracing cloud computing. Lebeau showed the areas in which IT has to create new value. IT improves decision making and supports processing. Besides adding value for the own company, IT produces the same benefit for customers and partners. “Currently IT focuses on internal processes with poor productivity. Cloud will prop up some productive processes but the hard work will remain to build enterprise data and provide productive processes. The big problem in this respect is the growing complexity of the internal IT infrastructure.” Lebeau mentions that new business applications tend to be less distinguishing because of the increasing speed of technology replication cycles. “The truth is that at GlaxoSmithKline – a very innovative company – we have little innovative IT. So there is few strategic value in most enterprise applications, but it is hard to get rid of it. Cloud computing is at this point only a solution for more simple internal processes.” “The good news is that new value comes from the
extensible enterprise. Clouds can here append immediate benefits. What matters is placing values at your customers disposal by providing access to your data; embedding information in products and services.” Machiavellian approach A company develops its own strategy towards cloud computing, but employees have their own expectations. Ian Gotts, founder and CEO of Nimbus, warns CIOs for the impact of the consumerisation of IT. Employees use iPhones, Gmail, Facebook, Google Apps, iTunes, YouTube a.o. at home. They expect this level of ease-of-use and functionality at work too. Gotts: “If you keep rejecting this easy accessibility, you are lost. They find ways to use it anyway. In every organisation there are ‘stealth clouds’.” While no aircraft is completely invisible to radar, stealth aircraft prevent conventional radars from detecting or tracking an aircraft effectively. The cloud might already be in your company, but still it is just not (yet) visible on the radar of your management… That’s why Gotts recommends a Machiavellian approach to the digital native users: try to become their trusted adviser. “Regardless of one’s views on the readiness of cloud computing to meet corporate IT needs, it is a development that cannot be ignored.” Sure, there are all kind of reasons to hold back, Gotts admitted, but you can move forward on non-core applications and proof-of-concept projects. “Like it or not, cloud computing is a game-changing technology that will reshape IT over the next decade.”
Gotts also predicts that the discussion about Business IT alignment will accelerate due to cloud computing. “At the end of the day the CIO has to be the technology leader in the business.” Gotts warns: “But this strategic role can also be played by an external consultant. This is a quite frightening perspective!”
customer. The training courses are developed with the support of major vendors. ING has adopted a virtualisation and cloud computing strategy and is now preparing a change campaign to prepare the ING workforce for the future. The training programme is an important part of this initiative.
Dr Daniel Lebeau, Vice President Information Management Systems of GlaxoSmithKline. picture
Ian Gotts, founder and CEO of Nimbus. > picture
Not a spending department Robbert Kuppens, CIO for Cisco’s European Market, described the way his company is moving towards the cloud. “We have an internal LinkedIn, but it doesn’t work. People just want to update information one time, so they use LinkedIn.” Cisco is building up cloud services and delivers it by way of a service catalogue with a price tag. The company discovered that 90% of the services people wanted were already available. The cloud service catalogue model helped people to find what they needed. Kuppens: “And what’s more. The service approach forces people to think about the assets they really want to use. But you have to realise that in this service approach you have to compete with the Amazons and Googles of this world.” The services paradigm helps to consider the IT department as a valuable provider instead of a spending department. Technology leader There will be an international training on virtualisation and cloud computing launched by Peter Hanselman. The initiators strive to set an international standard for a certified training programme. ING Bank is the launcher
Robbert Kuppens, CIO for Cisco’s European Market.
Generation Y Paul Redmond (University of Liverpool) elaborated on the effect of having ‘digital natives’ in the organisation. Following Alexis de Toqueville’s quotation that “Each generation is a new people”, Redmond distinguishes four computer generations. First the baby boomers (1943-63). According to Redmond they are the idealists, defined by post-war optimism and values. They work hard, are loyal and care about status and job title. Their children are generation X (1964-81). Redmond describes them as reactive. They grew up without the cold-war certainties. They are more loyal to their profession than to their employer. They are now the largest group in the workforce. They were the digital immigrants where the next generation Y (1982-2001) are digital natives by birth. Redmond: “Generation Y is always connected, self-confident, optimistic, independent, entrepreneurial and bored by routine. They embrace open social networks and want access to mentors and other company champions. They like change, challenge and choice. In the workforce they are the new kids on the block.” The latest generation, the Millennials, were born this decade. How they will evolve is difficult to predict today. Why is this important? Redmond points out that you need to manage and motivate different generations very differently. For example: “While baby boomers never expect to have contact with their boss, generation Y wants feedback every day.” One more: “The whole idea of a holiday is a baby boomer idea. Generation Y doesn’t even use the term. “They don’t work for you, they work with you for a time.”
Interview with Karel Kinders, Managing Director SAS Netherlands
Giving organisations insight in what they do not yet know SAS specialises in business analytics: descriptive and predictive analyses, which often combine internal and external sources of information. This enables customers to proactively gain appropriate insights, so that they can make better decisions in less time. With innovative solutions for vertical markets within an integrated framework, SAS helps customers create added value in more than 45,000 locations. Karel Kinders has been Managing Director at SAS Netherlands since 1 November 2008. He has had various management positions at Cognos, Siebel and Oracle. He now has some thirty years of experience in the software industry. As a company, how would you prefer to be seen by the CIO? Karel Kinders: “We want to be the definitive information partner, by assisting the CIO in continuously meeting information needs. We aim to provide them with new insights and knowledge which are relevant to their organisation. Helping customers gain understanding and control of business issues means they can improve their performance and make well-founded decisions more rapidly. This can be customer information to aid targeted marketing campaigns, capital calculations for risk management or management of performance indicators and sustainability. The analyses can serve commercial interests, but can also be used in healthcare, where we can create cost visibility and analyse the quality of individual treatments. We also help different government agencies to provide better service to citizens, monitor successes and comply with policies. We provide the power to be predictive and create insight into what organisations do not yet know.” How can you help a CIO? “With the SAS Business Analytics Framework, SAS provides a foundation for specific business
solutions (ranging from data integration to analysis), which enables the organisation to better understand the past, monitor the present and prepare for the future. By efficiently and continuously providing relevant management information a CIO is providing exactly what the directors are asking for. This can involve customer data for marketing or computational models for risk management, or more. SAS supplies standard solutions on the basis of which management can make fact-based decisions. With SAS solutions, the data can be accessed from different environments and databases. An integrated end-to-end solution with the advantages of flexibility and scalability. Deployable in heterogeneous and rapidly changing environments, with a low TCO, total transparency and proven technology. We help companies with predictive capabilities allowing them to calculate the optimum moment when machines have to be serviced. We also create visibility of fraud cases from masses of data, so that measures can be taken at a personal or a group level. With SAS, marketing and sales staff can create distinct customer profiles, so that targeted offers can be made to each customer group. Depending on its needs, an organisation may opt to deploy just one component of our Business Analytics Frame work. Components such as data integration, data quality, analytics and reporting are simple to integrate in an existing infrastructure and can be up and running in a few weeks.”
What does your technology roadmap or business roadmap look like? “SAS Netherlands will be working in a more market-oriented way. We want to turn any challenge our customers face into an opportunity for substantial added value, through the use of our software, services and partners. We help IT to provide insight into business issues, in order to enable stakeholders to take the right decisions. SAS has invested in technologies that help make an IT organisation more effective as well as more efficient. SAS High-Performance Computing makes full use of grid computing and the new SAS In-Memory Analytics technology that creates a self-reliant system for analysing huge quantities of data and for making calculations. This enables organisations to respond to complex issues in almost real time. This development makes it possible to deploy or reduce the current infrastructure very efficiently, and third party software licences are no longer necessary. Part of this solution is SAS In-Memory Analytics, the latest innovation in the SAS High-Performance Computing portfolio, which also contains database computing, grid computing and open source analytics.”
met in the best possible way. IT must deliver information to the organisation effectively and without interruption. Together with the relevant business units, the CIO can determine whether the quality of that information is adequate.”
What criteria does a CIO meet in the context of your solutions? “Good CIOs are specialists who exactly understand their company’s objectives and know which IT developments can contribute to meeting these in the most effective way. They have an important advisory role. Regardless of the improvements in efficiency that need to be made, their thinking must always remain customer focused. This applies equally for commercial enterprises and for government agencies. Their customer could be an external organisation or an internal division. More than ever, effectiveness must be looked at critically. Budgets are decreasing, but the demand for IT services is rising and in today’s world, speed is of extreme importance. A good CIO knows precisely what costs are being incurred where, and what levels of performance are being delivered. He or she allocates resources and knows wherever there is demand for them and services need to be provided. Also, a CIO makes his or her own IT organisation interact seamlessly with the business units. Only then can demand be
How do you know and measure that satisfactory results are being achieved for users and IT alike? “Because SAS provides business-specific solutions, we almost always have direct contact with the stakeholders. The business case for investing in our solutions is therefore usually made by those ultimately responsible. Together with the IT organisation, they define the business requirements, after which, in consultation, the partners and solutions that can meet their requirements are chosen. With each implementation, the desired results must be attained, which we then continue to monitor. Even after implementation, we maintain regular contact with our customers about possible improvements and additional needs. In addition, we perform customer satisfaction surveys every year, which also involve the business users. SAS Netherlands directors hold themselves personally responsible for customers’ satisfaction and for achieving the objectives for which they acquired SAS solutions.”
Karel Kinders, Managing Director at SAS Netherlands: “We want to be the definitive information partner, by assisting the CIO in continuously meeting information needs.”
Beyond information It is a mistake to think that successful organisations gain their edge from having more knowledge. In most cases the difference with the competition is created by the speed with which they convert that knowledge into actual actions. Whichever way you look at it, the decisions concerning whether, and in which way, information, knowledge and insights lead to strategic actions, are still made by mere humans. Therefore, it is necessary to pay more attention to the human behind the information.
Dr Guus Pijpers MBA, Managing Director of Acuerdis and Associate Professor of Information Behaviour at TiasNimbas Business School in Tilburg, the Netherlands, is the author of this article. He chairs the Special Interest Group Beyond Information of the Dutch CIOnet.
et us assume that every employee within the organisation sees information management as a core activity. And rightly so. The organisation has set up a clear structure for this purpose, with various tasks and responsibilities. We have shown them here in a diagram. The organisationâ€™s activities are defined in business processes, while the information systems process the information flow automatically. The architect, or at least the manager of these systems, is the CIO or IT director. From the size of the circles, you would assume that the three systems are in balance. Sadly, practice usually shows the opposite.
Overlapping creates confusion Usually too much attention is paid to the technology and the human side of things does not receive sufficient consideration. In particular, difficulties often occur in those places where activities overlap, because it is not clear who is responsible for what. In such an unclear situation things go wrong; either nothing happens or too much happens. Often the CIO is indeed able to say that he does control a large part of the business processes. All formal (ERP, BI, etc.) and informal (email, wikis, etc.) information flows run via his systems. However, it becomes more difficult when people enter the picture. On the one hand, people form part of the business processes and the technology. On the other hand, individuals process information in their own ways. This situation gives rise to tension. Information expertise The CIO gives the managers of the business processes ready-to-use information or manages information systems from which they themselves
are able to generate information. Yet for the CIO it is far more important and indeed more interesting to know what the organisation and above all the people are going to do with the information from those systems. Too little emphasis is placed on this.
ability to solve problems by seeking, finding and using information. A fourth point is the deployment and use of information by people. In practice, it seems that few owners of information systems ask for feedback, so they do not know if the users are able to work with the information provided.
Research has shown that recruitment policies devote too little attention to the information skills of new information workers.
‘Everything is open, unless’ A fifth and final point to emerge from the recent research is that every organisation recognises that information is the most important resource. Virtually all organisations believe in the ‘everything is open, unless’ principle. Yet it is still not enough just to provide the user with information. An employee’s attitude towards the data and the prevailing information culture largely determines whether employees use information effectively. Especially in complex environments, help from an information expert is a necessity.
First, the CIO needs to decide if he should be the one telling the business side what information they need to know. Some organisations designate a special department for this job (inside or outside the IT organisation) that focuses on the improved deployment and use of information. While many organisations recognise the importance of such a select group of motivated people, the idea tends to receive little attention from management. Second, a great deal of information in organisations is still operationally and historically oriented. There is a tendency to look at the whole in a predictive fashion and with a focus on sensitivities. Yet it remains unclear who should do it, who provides support for it and in particular, whether the user is knowledgeable enough to address such complex information needs. Information skills Third, everyone knows information workers as a concept. Yet there are still too few high-profile examples of employees who can serve as a model of the ultimate information worker. Let alone that CIOs themselves know what knowledge and skills this person should possess. Research has shown that recruitment policies devote too little attention to the information skills of new information workers. Information skills allude to one’s
Business processES, IT and people We cannot be clear enough. CIOs are gaining an increasingly important role in organisations. No other function within an organisation is able to oversee the three areas in Figure 1, namely, business processes, IT and people, in their full capacity. No other function has a certain level of understanding of all three of them either. IT must look for the human side again, both in the IT organisation itself and in the IT systems. It is only there that there is still much to be gained. The explicit support of senior management is a precondition here. Setting up a separate team is highly desirable. This group forms the link between formal information systems and individual users who always want even better business information. Finally, a practical policy is needed regarding the information skills required of employees for being able to and continuing to be able to function in today’s organisations. Effective deployment and use of data is after all one of the key competencies of an information worker/ manager. Especially now that many companies are partly introducing virtual working, they must be alert to the information behaviour of the employee. Virtual working quickly shows when someone lacks mastery of these crucial information skills.
The new ERP approach
Shift in the corporate culture ERP has a future, there is no doubt about it. Only, opinions differ on what that future looks like. True value and operational excellence are key for ERP to enter into the next decade.
urt De Ruwe has, in the course of his career, built up an impressive track record with SAP. In the past fifteen years he completed ten major implementations, including no less than 25 golives. He has been CIO of Bayer MaterialScience since 2007, at the headquarters of the company, in Leverkusen. He designed a far-reaching ERP programme there. De Ruwe convinced management to cast off all existing systems and start up a completely new SAP implementation. “ERP is not about software,” he says, “the software is the easy bit. ERP revolves around the value you create, via innovation of the business processes.” That, according to De Ruwe, is the key to the success of ERP. The processes have to be the main focus, not the transactions and least of all the software. When De Ruwe started work at Bayer MaterialScience, he encountered an enormously complex scheme. “With a team of one hundred employees we spent six months redesigning all processes. You can only achieve success when people really start to work in a different way.” The trick is to get people to join in the new approach. The involvement of the top layer of management is truly crucial. “I always recommend recording the management’s buy-in for the ERP on paper, to avoid any misunderstandings or doubts arising after the fact.” Positive business case The SAP project was successful in evolving Bayer MaterialScience towards being one central, standardised SAP environment. The project is approximately halfway completed now. The new ERP approach required an important shift in
the corporate culture. “Previously IT did everything it could to meet the wishes of the consumer. Everything was possible. Working with business cases was not done. Today our basic working premise is very different: tell us what you want, and we will tell you what you need.” Everyone is allowed to launch ideas, but only ideas with a strong business case stand a chance of being realised. It is essential to have an ROI of at least one year. “I am turning down ideas all the time, which doesn’t make me very popular”, says De Ruwe. Communication and education are therefore important for the future success of ERP. “We do not send out newsletters, there are blogs and wikis. The moment you go live with ERP is not the end but the beginning.” The rigorous approach – that Bayer MaterialScience ensured as a result of the redesigned processes – is realising significant savings year after year. Business Process as a Service Jan Baan is another professional with ample experience in the world of ERP. Nevertheless his views are considerably different from the classic take on ERP. He is the man who brought the ‘Baan’ ERP package onto the market in the late 1970s. A solution that still exists today in the ERP LN package of Infor. After the demise of Baan, Jan Baan acted as venture capitalist, for WebEx, the webconferencing application later sold to Cisco, and for TopTier, the foundation of the current integration platform SAP NetWeaver. With his company Cordys, Jan Baan is now once again connecting to the ERP market. “ERP is still the mother of all complexity”, he says. “More over, suppliers have always pushed the custom-
er into spending more: for Business Process Reengineering, for parameterisation, for customisation, etc. The result was an ERP solution that cost a fortune and at the same time completely fenced in the company.” Cloud provisioning With Cordys, Jan Baan aims to approach the requirements of each company in a new and different way. “To provide a company with added value, we apply the principle of mass customisation.” The cloud plays a significant role in this. “Infrastructure as a Service and Software as a Service are not good enough”, says Jan Baan. “We are working towards Business Pro cess as a Service, which is more developed than what a company like Google is offering today.” Cordys works with cloud provisioning. Cordys adds another layer on top of the standard functionality of ERP, CRM and SCM. Thanks to the extra layer the company can combine the required functionality instead of programming it as before. “This is an approach that truly leads to operational excellence,” claims Jan Baan, “something traditional ERP has not yet suc ceeded in doing.” The fact that the cloud is highly disruptive to the classic licence models of software suppliers poses no problems in Baan’s view. “New players like Google and VMware won’t experience any trouble there, but even companies like Microsoft are adjusting their vision of the classic licence model.”
Kurt De Ruwe, CIO of Bayer MaterialScience: “Software is the easy part. ERP is about value through business process innovation.”
Jan Baan, CEO of Cordys: “SaaS and IaaS are not good enough. Business Process as a Service, is what we are working towards.”
Wim Claeys,CIO of Petercam: “There is still a taboo on the risks of ERP budget overrun.”
CIOnet SURVEY: ERP is here to stay The CIO generally views ERP from a quite traditional perspective. This becomes clear from a poll among 49 CIOnet members. “To optimise and integrate processes is still the most important driver for ERP”, declares Wim Claeys, CIO of Petercam. “Companies from the industry, worldwide players and organisations with a large number of users choose a package in this respect. Custom software is usually found in government institutes, local and small companies.” The choice between package or custom, incidentally, does not influence the subsequent success of ERP. “Business involvement, business and IT alignment, and change management remain the biggest challenges.” The poll further shows that there is still a taboo on the risks of ERP budget overrun. “Not all respondents answered that question”, says Wim Claeys. “The companies that did, indicated that the chance of a budget overrun occurring rises in relation to the implementation of increased customisation.” The biggest challenge facing CIOs today is to adapt ERP to changes in legislation. Still, they are confident that ERP is a sound base for the future. For more in-depth analysis see pages 28-29.
ERP as a fact of life There are two main reasons for choosing ERP. ERP is used for common processes, most likely to realise post-merger synergies. Second, you want to become more competitive by optimising and integrating processes (e.g. ERP, CRM and SCM). What future is there for ERP? And what ERP solutions are the most interesting for your company?
he main conclusion of the survey conducted by CIOnet among 49 of its members (see also p 27) is that ERP is here to stay. More than 80% of respondents have ERP. From the remaining 20% half is in selection process and no one is planning to replace it. Even stronger: 88% of the respondents would choose ERP again if they could start over from scratch, but not necessarily with the same vendor and simpler if possible! No alternative The conclusion is quite surprising because the feedback is not always positive. Users often complain about the complexity, rigidity and lack of user-friendliness. The survey made clear that ERP implementations and maintenance are pricy and even risky. Results indicate that the running cost for ERP (27% of the IT cost on average) is higher than the one for other solutions. Moreover there always is a significant risk of surpassing the implementation budget and/or time if all good practices are followed. (Business) Change management is the biggest challenge. Finally respondents doubt whether their vendor will be able to cope with future business and IT challenges. But still, ERP is here to stay. At the other hand we understand that the investment to replace it would never pay off. The risks and effort would be huge. That’s why ERP has a natural lock-in. Although respondents who haven’t got ERP seem to be happy with their decision, still they point out that it will be hard to keep supporting their solutions in a changing environment.
Single ERP system or ERP environment Budget overruns and delivery delays of the target solution have often caused a partial implementation of ERP. This is particularly true in the larger companies with multiple legacy ERP solutions. The complexity of deploying a single ERP solution in an international context has triggered the debate about the optimal architecture for ERP. This discussion always ends in the choice between two extreme solutions: a single ERP system onto which all subsidiaries migrate, or a single access to an ERP environment to lever as many as possible valuable legacy components. The single ERP system solution tends to be cheaper, on the other hand the risk inherent to its implementation is definitely higher. Also, the attractiveness of a single ERP system solution strongly depends on the capacity of an international firm to streamline, harmonise and standardise its processes across all locations. No one and only best solution The authors of this article presume that there is no one and only best solution for all firms. The best choice depends on several aspects. A disciplined, centrally led company can push its standardised business processes across all locations supported by a single ERP system. Such a company implements ERP in a standard way, intending to reduce costs as much as possible. Sometimes ERP implementation is even used to enforce integration, standardisation and harmonisation. However, this approach requires you may sustain this strategy for a sufficiently long period and this implies that this single ERP architecture fulfils the company’s business needs.
In some cases it is rather unlikely that the pro cesses can be streamlined across locations. Maybe the processes are too heterogeneous, or maybe you can expect a high resistance for change, or perhaps the risk of losing business critical freedom is too high. In those cases the architecture will look quite different. We see two major possibilities. First you consider ERP as the backbone for processes that do not offer competitive advantage. In this solution you build other packages or tailor-made solutions around ERP. We see ERP vendors evolve in this direction, while opening their architecture with SOA-like techniques. The second solution is you accept working with a conglomerate of existing legacy solutions and/or best of breed.
Multiplicity of applications may raise questions on cost and risk of management. This combined solution is either based on packages (even multiple instances of ERP) or tailormade applications. In these solutions you integrate using SOA-like techniques allowing the harmonisation of user access and management information that is essential for acceptance and decision-making purposes. Although standardisation on the information exchange offers high flexibility in case of mergers and acquisitions, the multiplicity of applications raises many questions on cost and risk of management. We feel it could be interesting to study these options in more detail with the SIG architecture, because this is a major question all CIOs have to answer for their EA.
Believers versus non-believers The survey also shows a ‘believers’ versus ‘nonbelievers’ attitude of the respondents who do not have an ERP. Even 80% never evaluated the possibility. No spectacular new solutions are expected in future. Respondents indicate mainly cloud, virtualisation, SOA and better infrastructure as improvements. Some suggest to skip versions and to ignore the active pace forced upon CIOs by the vendors. Surprisingly we may also conclude from the survey that CIOs tend to have an IT view and do not give priority to business. Less than 10% of the respondents want to (or can) answer the question whether their chosen architecture suits the business needs and satisfies the users and the business management. Honesty requires to mention that also the question on satisfaction of IT management was only answered by less than 10%. We also have to admit that CIOs are modest. They consider business processes more mature than IT processes and this after years of ITIL and COBIT efforts! Finally we noticed that the interest for ERP among CIOs was not the one expected, because the participation rate for the event was not as high as for other events. The authors think this could be due to the main conclusion: “ERP is here to stay. CIOs accept this as a fact of life that is not in question for the moment.” Isn’t this another interesting point for further debate? We kindly encourage you to accept the challenge.
Philippe Niesten, CIO of Herstal, Ludo Van den Kerckhove, Partner at Across Technology and Tony Boucquillon, Director at Deloitte Consulting.
Philippe Niesten, Ludo Van den Kerckhove, Tony Boucquillon and Wim Claeys are the authors of this article.
Hope is not a method! How are CIOs dealing with Performance Management? CIOnet set up a survey that got an excellent response from 70 CIOs providing a ton of information.
he main objective of IT Governance is addressing IT’s performance in its contribution to the business. As one of the five domains of IT Governance, Performance Management is about measuring the other four domains. While Strategic Alignment and Risk Management should not be underestimated, CIOs are used to deal with the remaining two domains: measuring IT’s contribution to the business (Value Management) and measuring the usage and performance of resources necessary to deliver that value (Resource Management).
Erik Guldentops, the author of this article is Executive Professor at the University of Antwerp - Management School.
Real or perceived The survey showed most enterprises involved were sufficiently independent to establish their own IT strategy. It inquired the enterprises’ needs for reliable IT as well as for new IT to get the feel for what that strategy is, real or perceived. At the same time the survey probed for the perception of IT in the enterprise. The first two questions positioned all survey enterprises in the IT Strategic Impact Grid as defined by McFarlan, as being in the strategic mode. Those looking at the results could not ignore a sense of ‘wanting to be’ versus ‘really
are’, better known as the knowing-doing gap. This was confirmed by the perception questions. They indicated that IT is considered as a value enabler with predictable results. At the same time it showed a lesser believe in IT as a business opportunity and a lesser confidence in IT’s abilities and responsiveness. Metrics When measuring IT’s performance, the positioning in strategic mode is further questioned by the strong focus of enterprises on budget-oriented metrics. A quarter of the CIOs reporting to their CFO may have a strong impact on this. Even stronger indicators against the strategic positioning were the low importance of innovation and future orientation metrics compared to the financial, customer and operational metrics. Important ser vice metrics appeared easy to obtain. Or were they important because they are so easy to obtain? This illustrates one of the key issues in IT performance measurement: cost-efficient availability of metrics that closely link to the strategic objectives. Notwithstanding, the survey provided lots of data about the metrics with the highest impact to cost ratio in all industries. This together with data on importance, cost, inhibitors and enablers, actual and planned metrics will lead to further analysis and articles on Performance Management. Despite probably overrating themselves on their maturity on the subject, enterprises defined the key to success in Performance Management: the need to have clear objectives, strong focus and effective communication. Finally, let me quote John Thorp who spoke on IT Value to CIOnet members a couple of years ago. When confronting an executive with the fact that performance results of past projects were not properly used in a business case, he got the answer that they would surely perform better in the future. John exclaimed: “Hope is not a method!”
Time to raise corporate IT to the level of Generation Y
ntil the end of the 20th century, IT innovation took place in the corporate sphere, led by a select group of large software companies. But in the last ten years, we have witnessed a revolution. IT innovation has moved into the consumer domain, with myriads of smaller providers supplying a steady stream of smart devices and services that are well designed, cheap, user-friendly and clever at adding value.
Are corporations enjoying the same buzz as consumers? Unfortunately not: corporate IT, still using inappropriate user interfaces, remains firmly anchored in the last century, supplied by the same small group of software companies that – most likely because of a reluctance to relinquish their de facto monopoly – make no effort to embrace the changes happening around them. The most common anti-change argument is security, the reason given that these new devices and services, which encourage information sharing, are not safe and would jeopardise our most valuable assets. Then just imagine how dangerously we are already living at home, with our online banking, data storage, shopping, networking, and calling! Never forget that trust lies at the core of these services and the providers realise what’s at stake should they fail. Why aren’t companies developing and using similar solutions? The reason is not technical; it is attitudinal. Take for example, communicating via the Internet. This is prohibited for security reasons in many companies, Solvay included. But for 99% of the time, what we say or write is not confidential and these services work extremely well and are entirely free. Generation Y understands this: our future managers communicate in their private lives via instant messaging and social networking sites, not by telephone, email or fax. Rather than ignoring this, let’s embrace this behaviour and focus instead on communicating best practice and intelligent usage in the workplace. Each day, the gap between the quality of IT that corporations can access and the services we need is growing larger. We can no longer afford to allow policy or incumbent providers prevent us from benefiting from smart devices and services that our people will enjoy using and that will better support business in today’s global marketplace. We need to start changing now!
CIO of Solvay
THE JOURNEY TO THE
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