CIO May 15 2009 Issue

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MAY 15, 2009 | Rs100.00

www.CIO.IN

VOL/04 | ISSUE/13

Unearthing Licenses

Why you need better software

management tools.Page 50

compLexity redUction

With cutbacks reigning, prepare

to be busy.Page 42

r.K. upadhyay, dgM of BsnlBangalore is able to better tap

business opportunities because of his management education.

forforHere’s how an MBA helped BSNL lower costs, increase productivity and drumup new business. Page 26

Vijay [email protected]

From The ediTor-in-ChieF

For the past few weeks I’ve been asking CIOs about how they go about justifying IT

investments and come up with convincing arguments for their managements to bite into. I was

curious about how this process panned out (or whether indeed there was a process involved). A

couple of them discussed how they went about building justification models; I know of at least

one CIO who has a complex spreadsheet with twenty-plus parameters to convince the suits in

the boardroom.

But what the responses distilled down to was that getting the purse-strings opened required

everything from soft-soap to hard-sell. A bunch even told me that what worked for them in a

pinch was pulling out the hoodoo of downtime, business disruption and related costs.

In my bid to find out more, I spoke to people on the vendor side of the fence as well. Did they

have any means, methods or mechanisms to enable CIOs to win over the suits? Well, as it turned

out, a few of them seemed to be on the ball and talked of benchmarking within verticals, best

practices, maturity models and, yes, even RoI justification. But here too there were a bunch

who said that the best argument was (you

guessed it) the cost of downtime.

And then I met the CIO of a

manufacturing organization who told

me that over the past few years, while

working his way through revamping his

organization’s IT infrastructure, he’s gone way past sinking his time and effort into convincing

the bean counters.

His way is to put the onus of securing financial buy-in on line of business heads — by making

them initiate the projects. The process goes a bit like this:

Biz Dude: We need a new merchandising system to tap in to our below-the-line customers.

CIO: Sure thing. By the way, what exactly do you want us to do?

Biz Dude: Hey! I don’t understand this tech stuff. You write out the tech specs. That’s

your expertise.

CIO: I’ll depute one of my people to work with you and help ‘you’ put them together. Once

that’s done, you go to the CFO and get it cleared. We’ll back you 100 percent, but it’s your project

after all.

What I like about this process is that it involves a business champion providing a business

justification for a project.

How do you go about this? Write in and let me know.

Getting the purse-strings opened for an IT investment seems to require everything from soft-soap to scare tactics.

Why do CIOs push project justification?

From Soft-Soap to Hard-Sell

VOl/4 | ISSUE/132 M A Y 1 5 , 2 0 0 9 | REAL CIO WORLD

Content,Editorial,Colophone.indd 2 5/12/2009 6:29:43 PM

Corporate DownsizingCOmpLExIty REDuCtIOn | 42When companies cut back the heavy lifting for IT begins. Feature by Kim S. nash

E-invoicing SmARt WInS: pApER tAKES FLIght | 47With e-document delivery, electronic invoicing can be a no-brainer. Feature by Esther Shein

Business Strategy unEARthIng LICEnCES | 50Many enterprises are so deeply buried under a desert of licenses that only software asset management (SAM) tools can help them. But even those that aren’t can find SAM useful to reduce costs. Feature by John Lamb

more»

Management SkillsCOVER StORy SChOOLED FOR BuSInESS | 26Why an MBA can bring out the business leader your company needs you to be.Feature by John Lamb, Kanika goswami, Sneha Jha and Sunil Shah

pLuS:

tEn REASOnS Why yOu nEED An mBA | 34Getting an MBA is hard work; it takes time, money and plenty of effort. But it could just be the thing you need. Feature by thomas macKay

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MAY 15 2009‑|‑Vol/4‑|‑issue/13

R.K. Upadhyay, Deputy GM (IT & BD), BSNL, confesses that he was obsessed with technology until he realized

that he needed an education in management if he wanted to help the business grow.

26


5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM5/12/2009 6:29:46 PM


content (cont.)

DEparTMEnTS

NOW ONLINE

For more opinions, features, analyses and updates, log on to our companion website and discover content designed to help you and your organization deploy It strategically. go to www.cio.in

c o.in

Case FiletEChnOLOgy On thE mOVE | 38Needing to move 465 million people every year, the Toronto Transit Commission is keen on putting technology to work. That’s giving CIO John Cannon and the IT department the opportunity to tackle a variety of dynamic new projects. Feature by David Carey

peer-to-peerACquISItIOn AngSt | 19A former CIO describes an acquisition disaster, which proves why IT must be a part of a diligence team in an M&A.Column by Al Kuebler

Trendlines | 11 Staff management | Where are Your IT Skills? quick take | On CRM Solutions Voices | Should CIOs Look for Careers Outside IT? hardware | Wake Up Call for Sleeping Laptops Survey | IT Ignores PC Power Management Opinion poll | Operations, Not Innovation Internet | Threat of the Web telecommunication | Car Bills Go Mobile It Budget | IT Spending Sends Out Signs of Hope green It | Greening Your Datacenter

unified Communication |Talking Money Security |Welcome Back Image Spam Alternative Views | Is Saas Enterprise-ready?

Essential Technology | 54 It Delivery |Can Google Apps Go Big Time? Feature by C.G. Lynch pundit | Discordant Notes By Thomas Wailgum

From the Editor-in-Chief | 2 From Soft-Soap to hard-Sell

By Vijay Ramachandran

2 2

3 8


All rights reserved. No part of this publication may be reproduced by any means without prior written permission from the publisher. Address requests for customized reprints to IDG Media Private Limited, Geetha Building, 49, 3rd Cross, Mission Road, Bangalore - 560 027, India. IDG Media Private Limited is an IDG (International Data Group) company.

Printed and Published by Louis D’Mello on behalf of IDG Media Private Limited, Geetha Building, 49, 3rd Cross, Mission Road, Bangalore - 560 027. Editor: Louis D’Mello Printed at Manipal Press Ltd., Press Corner, Tile Factory Road, Manipal, Udupi, Karnataka - 576 104.

PUBLISheR louis d’Mello

ASSocIATe PUBLISheR alok anand

eDIToRIAL

eDIToR-IN-chIeF Vijay ramachandran

ASSISTANT eDIToRS gunjan trivedi,

Kanika goswami

coRReSPoNDeNTS Sneha Jha,

chIeF coPY eDIToR Sunil Shah

coPY eDIToRS deepti balani,

Shardha Subramanian

PRoDUcT MANAGeR oNLINe Sreekant Sastry

DeSIGN & PRoDUcTIoN

cReATIve DIRecToR Jayan K narayanan

LeAD vISUALIzeR binesh Sreedharan

LeAD DeSIGNeRS Vikas Kapoor, anil V K

Vinoj K n, Suresh nair

girish a V (Multimedia)

SeNIoR DeSIGNeRS Jinan K Vijayan, Jithesh C C

Unnikrishnan a V

Sani Mani (Multimedia)

DeSIGNeRS M M Shanith, anil t

P C anoop, Prasanth t r

PhoToGRAPhY Srivatsa Shandilya

PRoDUcTIoN MANAGeR t K Karunakaran

DY. PRoDUcTIoN MANAGeR t K Jayadeep

MARKeTING AND SALeS

vP SALeS Sudhir Kamath

GeNeRAL MANAGeR nitin Walia

SeNIoR MANANGeR Siddharth Singh,

ASSISTANT MANAGeR Sukanya Saikia

BANGALoRe Kumarjeet bhattacharjee,

arun Kumar, Manoj d.

DeLhI aveek bhose, gagandeep

Kaiser, Punit Mishra

MUMBAI Parul Singh, hafeez Shaikh,

Suresh balaji,

dipti Mahendra Modi

JAPAN tomoko Fujikawa

USA larry arthur; Jo ben-atar

eveNTS

vP rupesh Sreedharan

SeNIoR MANAGeR Chetan acharya

MANAGeRS ajay adhikari, Pooja Chhabra

AdverTiser index

Avaya 4 & 5

Avocent IBC

Canon BC

Emerson 7

Krone 1

QSFT 3

Sigma Byte 9

Sony IFC

This index is provided as an additional service. The publisher does not assume any liabilities for errors or omissions.

ALoK KUMAR

global head - Internal It, tCS

ANIL KhoPKAR

gM (MIS) & CIO, bajaj auto

ANJAN choUDhURY

CtO, bSE

AShISh chAUhAN

President & CIO, It applications, reliance Industries

ATUL JAYAwANT

President Corporate It & group CIO, aditya birla group

DoNALD PATRA

CIO, hSbC India

DR. JAI MeNoN

director technology & Customer Service, bharti airtel &

group CIO, bharti Enterprises

GoPAL ShUKLA

VP - business Systems, hindustan Coca Cola

MANISh choKSI

Chief Corporate Strategy & CIO, asian Paints

MANISh GUPTA

director-It, Pepsi Foods

MURALIKRIShNA K.

head - CCd, Infosys technologies

NAvIN chADhA

CIO, Vodafone

PRAvIR vohRA

group CtO, ICICI bank

RAJeSh UPPAL

Chief general Manager It & distribution, Maruti Udyog

SANJAY JAIN

CIO, WnS global Services

ShReeKANT MoKAShI

Chief-It, tata Steel

SUNIL MehTA

Sr. VP & area Systems director (Central asia), JWt

T.K. SUBRAMANIAN

div. VP-IS, Ub group

v. K MAGAPU

director, larsen & toubro

v.v.R BABU

group CIO, ItC

GoverninG BoArd

VOl/4 | ISSUE/131 0 M A Y 1 5 , 2 0 0 9 | REAL CIO WORLD


n e w * h o t * u n e x p e c t e d

S t a f f M a n a g e M e n t Industries in the Asia Pacific stand to be negatively affected by a lack of relevant IT talent, according to Springboard Research, which surveyed 400 IT end-users, 400 software developers and programmers and 82 IT training providers in Australia, China, India, Malaysia and the Philippines.

Results showed that enterprises in the Asia Pacific are seeing the greatest short-age in areas like enterprise architecture, app development and system integration.

The survey also found regional companies to be lacking talented IT staff who also possess business-domain knowledge and managerial skills.

"The biggest current skills-related challenge is not availability, but gaps in the available skill pool," said Ravi Shekhar Pandey, research manager, Springboard Research. "Also, the quality of both technical and non-technical skills is certainly an issue, and where quality is not a concern, it is challenging to find enough people with an adequate blend of skills and experience." Pandey said.

The report said that skill shortages were more apparent in manufacturing and government, while the finance and government suffered from a lack of quality skills. The shortage of IT professionals with adequate business knowledge most affected high-tech manufacturing companies, like those making semiconductors and flat panel displays.

Research findings showed that 70 percent of businesses were not looking to hire IT staff in the next year, and those planning to hire were mostly looking for staff skilled in IT support and maintenance, app development and system integration. Seventy percent of companies seeking to hire reported requiring personnel skilled in Microsoft applications, followed by SAP, Oracle and IBM.

IT developers said MS programming languages to be the most popular, while more than half of the respondents found Java to be the most essential language, given today's business environment.

Of IT developers, 37 percent listed acquiring project management skills as a top priority.

IT training and education providers surveyed said courses in C++ and Java were the most popular.

—By Melissa Chua

Where are Your IT SkIllS?

C R M The slowdown is encouraging organizations to look for opportunities to win over new customers and retain existing ones. — and CRM solutions are proving to be an important weapon. Shardha Subramanian spoke to S.S. Soni, executive director-IS, Indian Oil, to find out how he runs his CRM solution.

Do you have a CRM solution? We are in the process of implementing a full-scale CRM solution and a total sales management system for one of our major divisions. We also have some in-house developments to cater to the specific requirements from our marketing division.

Is this a good time to get one? What, according to you, is an ideal CRM solution?Definitely. With a fully stabilized ERP backbone, CRM is being considered as an important component. An ideal CRM solution should be able to integrate all the information pertaining to customers into one system to effectively and pro-actively

S.S. Soni on CRM Solutionsservice customers. It should help reduce paperwork both for customers and the organization through in-built sales process flows.

What decisions will a CIO have to make to implement CRM?Finding a solution that fits our needs is the most important issue. It has to be customer-focused because the solution is being implemented for them. Another challenge is choosing from a variety of models like standard solution on-premises or an on-demand solution or a hybrid

solution. And also, a CRM system has to be fully integrated with the ERP system.

How do you judge the success of a CRM system?The most important factor is customer use. If a solution is not being used as much as it should then it just doesn’t make sense. Customer queries have to be handled efficiently. Also, if the solution has helped the business grow in terms of volumes, improved brand image and enabled customer retention then it is a success.

Quick take

S.S. Soni

n e w

REAL CIO WORLD | M a Y 1 5 , 2 0 0 9 1 1Vol/4 | ISSue/13

The survey also found regional companies to be lacking talented IT staff who also possess business-domain knowledge and managerial skills.

challenge is not availability, but gaps in the available skill pool," said Ravi Shekhar Pandey, research manager, Springboard Research. "Also, the quality of both technical and non-technical skills is certainly an issue, and where quality is not

Where are Your IT Sk

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H a R d w a R e Researchers have developed a technology that could allow laptops to wake up instantly from a shut-down state without draining battery life the way sleep states do.

University researchers have built ferroelectric material — commonly found on smartcards — on silicon, which could allow certain transistors to retain information after power is shut off. Scientists from Pennsylvania State University, Cornell University and Northwestern University are involved in the research.

The new findings could save users time by instantly booting laptops to their state when they were shut down. For example, a transistor in the laptop will be able to retain the state of a Word document on shutdown, and instantly reload the same state on reboot.

"It would be instant-on, meaning as soon as the power comes back on, your computer would be in exactly the same state it was when you turned it off and ready for action," said Darrell Schlom, principal investigator and professor at the department of materials science and engineering at Pennsylvania State University.

Quick-boot capabilities are enabled in laptops and most mobile devices, but many are unable to recreate shutdown states. Laptops usually never reboot back to their shutdown state, unless they are in sleep mode, which drains battery power. In essence, ferroelectric materials could wake up laptops from sleep mode, but without drawing any battery power.

The research could pave the way for a new generation of lower-power, higher-speed memory devices, Schlom said. For laptop users, it could reduce the time to load an OS from storage devices like hard drives. The ferroelectric material could also retain data in case power is lost.

The research revolves around building ferroelectric transistors — which can retain data in any electric state — on hybrid transistors. Ferroelectric materials are found in smartcards used today in subway, ATM and fuel cards.

Typically when power is turned off, voltages disappear from transistors, which have to be recreated when power is turned on. To recreate them, the relevant information is loaded from non-volatile storage mediums like hard drives, which takes time. The ferroelectric transistors retain magnetization when the electric field is turned off, allowing it to retain data.

The technology will load operating systems differently from existing memory technologies like DRAM and storage technologies like hard drives and solid-state drives, Schlom said. Ferroelectric transistors conceptually differ in the way data is loaded and retained, Schlom said.

—By Agam Shah

Should CIOs Look at Career Paths Outside IT?l e a d e R S H i p Today, CIOs are acquiring skills beyond pure technological proficiency. Modern day CIOs possess broad cross-functional expertise and are showing a readiness to stretch beyond their core competencies. So should they advance their careers by looking beyond pure IT? Sneha Jhaspoke to your peers to find out what they thought.

V. SundarCIo, T.V. Sundram Iyenger & Sons

p. Shobhana p. Shobhana p raVaVa iaVP-IT & learning, Taearning, Taearning, T Fe

“They should consider looking at“They should consider looking at“They should consider looking

non-technology roles because “They should consider looking

non-technology roles because “They should consider looking

they have a fair chance of moving into business, risk management, operations and customer services, sales and partnership management. "

hiteSh aroraeVP & head-IT, Maxnew York life Insurance

Write to [email protected]

Lend Your

Voice

“Being the head of IT, a CIO explores various technologies useful to business. He also has a sound understanding of business processes. Therefore he is suited for a role outside IT.”

“Strategic, customer, people and result orientation are competencies that CIOs have

and therefore they can build career paths outside IT too.

For example, I handle learning and drive the

business excellence initiative, besides IT.”

Wake Up Call for Sleeping Laptops

Vol/4 | ISSue/131 2 M a Y 1 5 , 2 0 0 9 | REAL CIO WORLD

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Source: IT Governance Institute

i t B u d g e t Most IT professionals, according to a survey conducted by Forrester Research, aren't managing PC power use within their organizations, even as many companies look to cut costs because of the economic recession. By not doing so, they may be passing up big savings, especially in regions with high energy costs.

Forrester surveyed 91 IT managers in midsize and large companies about their PC power management practices. The consulting firm found that only 13 percent of the respondents had implemented wide-scale power management programs, while another 18 percent had set up programs but not for all of their PCs.

The top reason cited for the low deployment rate was IT managers not being responsible for technology energy costs, said Doug Washburn, the Forrester analyst who conducted the survey.

The survey results aren't surprising. The US Environmental Protection Agency estimates that no more than 10 percent of all PCs in use within organizations have their power management capabilities turned on.

One reason for that may be skepticism about how much money can be saved per PC. Another may be the continued use of Windows XP. Windows Vista gives administrators the ability to natively manage power settings on PCs over a network, but XP does not, although there are third-party tools available for that. In addition, managing electricity usage typically falls under the duties of facilities managers such as Forrest Miller, director of support services at the Lake Washington School District in Redmond. Among other things, he is responsible for the power utilization of about 11,500 PCs.

For the past several years, Miller has been using software from Seattle-based Verdiem to manage the school district's

PC power consumption. The tool is set to put PCs into sleep mode after 20 minutes of inactivity, said Miller, whose IT department administers the software for him.

Miller said he views power management as an easy way for users to have a major impact on energy costs with minimal or no impact on work processes. He added that he has yet to hear any complaints from employees about the program. "It would be interesting to me to know why people

wouldn't do this," he said of PC power management in general.

Washburn said there are other reasons why PC power management tools aren't being deployed more widely. That includes concerns about possible end-user backlash, uncertainties about the best approach and policies to put in place, and an inability to predict financial savings and make a business case for a program if companies haven't measured their existing power consumption levels.

But only 9 percent of the IT managers surveyed by Forrester said they had no interest whatsoever in PC power management, while 48 percent said they were considering the idea of setting up a program.

Washburn thinks that change is underway. Even if IT managers don't own the energy budget at their companies, "there is much more pressure to understand energy consumption," he said.

—By Patrick Thibodeau

NO mOre THaN 10 perCeNT OF all

pCS IN uSe wITHIN OrgaNIzaTIONS have

their power management capabilities turned

on, according to the US Environmental Protection Agency.

operations,Not InnovationBoards talk about how IT runs, not what it can do.

Improving IT operational performance

Role of IT in future business success

Contribution of IT to innovative practices

Reducing IT costs

IT-related risks

Other/don’t know

59%

36%

30%

28%

28%

14%


Forrester: IT Turning a Blind Eye to PC POWER MAnAgEMEnt

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i n t e R n e t The Internet continues to be a growing source of security threats, as malicious Web-based attacks continue to grow at a record pace, according to Symantec’s Internet Security Threat Report (ISTR).

Covering the period from January to December 2008, the ISTR found that Web-based attacks originated from countries around the globe, with the most originating from the US (38 percent), followed by China (13 percent), and the Ukraine (12 percent). Six of the top 10 countries where Web-based attacks were prominent were from the Europe, Middle East, and Africa (EMEA) region — accounting for 45 percent of the worldwide total.

In the Asia-Pacific/Japan (APJ) region, China had the highest malicious activity in 2008, accounting for 41 percent of the overall proportion. The Philippines, meanwhile, had the lowest malicious activity in the region, accounting for only 2 percent of the total pie.

According to the report, Internet and broadband growth or penetration in a certain country may be correlative to its share of malicious activity as malicious activity usually affects computers that are connected to high-speed broadband connections. The ISTR further found that Web surfing remained the primary source of new infections in 2008 and that attackers

are relying more in customized malicious code toolkits to develop and distribute threats. Further, 90 percent of all threats detected during the study period were attempts to steal confidential information. Theft and loss also remain the top cause of data leakage for overall

data breaches and identities exposed, with many data breaches found to be related to loss of small, portable devices like USB memory keys, portable hard drives, and smart phones.

Phishing continued to grow in 2008, with financial services accounting for 76 percent of phishing lures in 2008, a significant growth from 52 percent in 2007. ISP accounts are also seen as valuable targets for phishers as people tend to use the same authentication credentials for multiple accounts, including e-mail accounts.

The volume of spam likewise continues to grow, with bot networks responsible for the distribution of approximately 90 percent of all spam e-mail in 2008. According to the report, attackers are increasingly targeting end users by compromising high-traffic, trusted Web sites.

In the future, enterprises and consumers alike have to watch out for the explosion of malware variants and more threats related to social networking sites as the proliferation of social networks has brought about an up tick in malicious activity and threats.

—By Jenalyn Rubio

remained the primary source of new infections in 2008 and that attackers

data breaches and identities exposed, with many data breaches found

Where the Attacks are Coming From

Source: Symantec

38% United States

13% China

12% Ukraine

8% Netherlands

5% Russia

5% United Kingdom

3% Canada

2% Japan

1% Latvia

1% France


Car Bills Go Mobile Car Bills Go Mobile

threat of the Web

t e l e C o M M u n i C a t i o n Car payments can be initiated using text messaging from a mobile phone under a pilot project announced by Western union and Consumer Portfolio Services.

once a customer sets up the service, an alert is sent to the user's phone that a an alert is sent to the user's phone that a car payment is due. The user types a ‘yes’ car payment is due. The user types a ‘yes’ response as a text message to authorize response as a text message to authorize transfer of the payment from a credit or debit transfer of the payment from a credit or debit card, the companies said. card, the companies said. a confirmation text message is sent seconds later to the user.

a division of security vendor VeriSign worked with Western union and CPS to set up the test program, which is expected to last about three months, said rené link, vice president of corporate strategy at VeriSign's Messaging and Mobile Media division.

"People are getting more and more accustomed to doing what they have been doing online, but now on mobile," he said. "networks and devices and security have gotten better, and there are 3 billion mobile handsets across the globe. We see a great opportunity in this space."

using SMS, or text messages, means that Western union and CPS can avoid sending customers to a website from a mobile device or an interactive voice response system, which are costly alternatives for billing companies and can be cumbersome to set up, link said.

Steve kramer, vice president of electronic payments at Western union, said the VeriSign nion, said the VeriSign approach bypasses many security problems approach bypasses many security problems with mobile banking and bill payment, since with mobile banking and bill payment, since no account information is passed over the no account information is passed over the wireless network. users also can decline to make payment when the alert is sent.

"We think this will work well especially in this economy, as people prioritize bills and want to decide when to pay," kramer said. Part of the purpose of the pilot is to see if the mobile payment approach with CPS leads to more on-time payments. Western union annually transfers more than uS$400 million (about rs 2,000 crore) in bill payments, but they are made electronically from desktops or in cash, he said.

—by Matt hamblen

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i t B u d g e t IT buyers say they plan to increase their investments in technology before the end of 2009, recent survey results show, as a noteworthy number of high-tech decision makers revealed they expect to put more budget funds into IT in the next six months.

over 25 percent of 500 IT professionals polled by non-profit ISaCa said they will be increasing their investments in IT this year. nearly 30 percent of small businesses polled by CDW in March also expect budget increases before the end of 2009. and CDW found 18 percent of midsize companies expect to hire more staff over that same time. CDW polls approximately 1,000 or more IT decision makers periodically, and the research and analysis firm noted the plans to increase spending — albeit still the minority position — indicate a positive shift in thinking among IT buyers.

"For the first time in more than a year, we are seeing green shoots that indicate returning confidence in the It industry," said Mark gambill, CDW vice president. "The fact that an

increasing number of IT decision makers are anticipating any amount of future growth at this time is reason to believe the first signs of spring may have arrived in what has been a gloomy economic climate."

other positive signs, according to ISaCa, include the fact that more IT professionals realize the value IT delivers to the business and how continued investment in technology could help companies fare better during and following an economic recession. More than 69 percent of those surveyed by ISaCa said that their organizations are achieving at least 50 percent to 100 percent of the expected value from their IT investments.

"organizations should be careful not to ignore the value-generating opportunities of IT in favor of cost-cutting," said robert Stroud, international vice president of ISaCa. "IT has the power to add competitive advantage and significant business value, so it is critical to focus on those opportunities — particularly in troubled economic times."

—by Denise Dubie

g R e e n i t If your datacenter is really cold you should take a look at hardware specifications to see if the temperature can be turned up, which will result in savings on the power bill, according to SNIA (Storage Networking Industry Association) Europe chairman Juergen Arnold.

There is a lot of talk about green datacenters, but when it comes to actual energy-saving projects and investments there isn't much going on, according to Arnold, who spoke at a SNIA Europe Academy event in Stockholm. Arnold attributes the gap between talk and action to the economic downturn, and companies spending money elsewhere. But it's important that the issue doesn't get lost, he said.

Even if budgets are tight there is a lot that can be done to make datacenters greener and more energy efficient without spending a lot of money. A

good place to start is cooling, because it represents 70 percent of datacenter power spending, according to Arnold.

There is a lot of room for improvements, said Arnold. Currently, many datacenters are too cold. "That's just because datacenter managers want to be on the safe side, and they don't know what kind of equipment they have," he said.

So companies need to check hardware specifications and assess what the actual temperature in the datacenter should be, according to Arnold. New equipment can handle higher temperatures, compared to legacy hardware. If an assessment shows, for example, that there is an old

storage array that stands in the way of increasing datacenter temperature from 18 degrees to 25 degrees Celsius it could make financial sense to replace it, Arnold said. Other tips on Arnold's do-it-yourself list include sorting out cabling and putting blanking panels

in place in racks to improve airflow, and turning out the lights.

Much of this is trivial but people don't think, for example, about messy cabling that can have an impact on your power and cooling requirements. "To change it doesn't cost any money, and it might take you half a day to sort it out," said Arnold.

Companies that want to delve deeper should take a look at the EU Code of Conduct for Datacenters, according to Arnold, who was involved in creating the document and now would like to see the European Union spend some money on marketing to increase awareness.

It includes 117 best practices, that all have been given a qualitative value — from 1 to 5 with 5 being the maximum value — to indicate the benefit that can be expected, according to Arnold. Turning off the lights, preferably automatically, gets a 1. On the other hand, virtualizing and archiving rarely used legacy applications gets a 5.

—By Mikael Ricknäs

Powering Up Your Datacenter

70%The amount that

cooling contributes to datacenter energy bills.


IT Spending Sends out Signs of Hope


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S e C u R i t y Spammers have turned back the clock and are recycling a years-old tactic by planting their messages in images, a security researcher warns.

Image spam, which hit a peak in late 2006 and early 2007, has made a comeback, says holly Stewart, the threat response manager of IbM Internet Security System's X-Force team. after barely registering during most of 2008, image-based spam accounted for about 25 percent of all spam at the end of april.

Stewart says it is surprising because spammers that rely on technological

trickery rarely return to an older tactic once anti-spam vendors have figured out how to detect the junk mail.

When spammers first started using images rather than text, they were successful at slipping their pitches through filters, which were designed only to parse text and look for such things as links. Their success led to an explosion in image-based spam.

The only real difference this time, Stewart says, is the sales pitch. "Most image spam was stock pump-and-dump, but now the focus is on drugs and pills," says Stewart, who credits the change to the recession and the poor performance of Wall Street.

also odd, she says, is that few of the messages included ready-to-click links. Instead, the images contain a url that the user must laboriously type in manually.

Spammers conducted an image spam test run in March, according to X-Force's data, which showed a spike in the tactic

from about March 19 to april 9. The test was obviously successful, Stewart says, because after a short period when the tactic disappeared entirely, it roared back with a vengeance on april 21.

"actually, it's pretty incredible that this could be successful again," Stewart says, noting that most anti-spam filters should block these e-mails, unless the vendor, perhaps for performance reasons, had ditched them when image-based spam vanished last year.

The return of image spam could be the first resurrection of other once-popular tactics, she warns. "We may see others come back," Stewart says, and ticked off MP3 spam — mail that replaced text with an audio clip — and PDF-based spam. both were popular in 2006 and 2007.

of the discarded tactics, Stewart selects PDF spam as the one most likely to reappear. "It was short-lived, but if I had to pick, I would point to the PDF vector,"

—by Gregg keizer


u n i f i e d C o M M u n i C a t i o n Considering the economy, some companies might not see an immediate need for unified communications (UC) and collaboration tools, but IT leaders argue these technologies could help businesses increase productivity, cut costs and reduce their carbon footprint.

IT leaders at companies such as financial services provider State Street have invested in UC and collaboration technologies to help better link its employees worldwide. Madge Meyer, executive VP of Global Infrastructure Services at State Street says that despite regional differences, customers should be able to expect services delivered consistently around the world. "The challenge of globalization is managing change across all regions," says Meyer. "You have to leverage all these technologies to share information, even down to inexpensive desktop monitors and cameras to simulate group meetings with people around the world."

That type of desktop Web conferencing and collaboration tool is also part of a UC and collaboration project at Groupe Danone. Mike Close, CTO of the company's North American operations, says the company worked to transform "the way we do business" to better serve customers, but also to "attract the next generation workforce."

"We started the project focused on instant messaging and e-mail, but when oil prices spiked, videoconferencing became the first technology to put in place," Close said.

And so far this year, Danone has hosted 1,050 videoconference calls with 70 high-definition monitors. The company estimates that 15 percent of all videoconference calls reduce travel costs and employee carbon emissions. Yet the challenge faced with adopting such technologies isn't always financial. Close says getting people to change the way they work required special attention to training.

That is not uncommon, says Irwin Lazar, VP for communications at Nemertes Research. For many companies, the biggest hurdle following business buy-in is an organization's culture. He says companies looking to justify an investment in UC during the downturn might be challenged with a simple cost-savings argument. Creating a more productive work environment could help address the financial as well as the cultural challenges.

"VoIP, for instance, is a difficult argument to make based on cost savings alone, but if you work in disaster recovery and other UC tools such as video conferencing, more tangible benefits become apparent," Lazar said.

—By Denise Dubie

When talking Means Money

Welcome Back Image Spam


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IS SaaS EntERPRISE READy? Maturity Vs Benefits

Amit GuptaVP-IT, Fidelity Business Services India

“The SaaS model has to prove its enterprise readiness before enjoying mainstream acceptance.”

Anil Nadkarni CTO, Mercury Travels

“SaaS is all set to be a good value-add for the

enterprise. It is just the mindset that needs to change.”

Software-as-a-service is a method of selling software in which a vendor or service provider hosts the applications and makes them available to customers as a service, rather than as a product. Instead of purchasing and installing expensive enterprise application, users access them over a network, with the help of an Internet browser. A SaaS-based application model has tremendous potential. And it is increasingly gaining traction.

Adoption of SaaS-based applications for certain business processes can help reduce capital investment. It is a cost effective option for price sensitive enterprises. It can save them a lot of money if they drive adoption of the model across the enterprise.

SaaS is all set to be a good value-add for an enterprise. It is just the mindset that needs to change to adopt such a service.

Generating awareness about the concept and benefits of SaaS is important and could lead to its adoption. Deploying a SaaS model ensures that enterprises save a lot on resources, infrastructure and, most importantly, on space. All you need is a desktop and a secure Internet connection.

We use a CRM on-demand service from Oracle. This has proved beneficial to our company as we are now able to integrate multiple customer channels such as the Web, sales shops and the call center. The data is available to all these channels at all times resulting in better and efficient service to our customers. As a CTO, my concerns about upgrading, migration, and disaster recovery are addressed, giving me more time to concentrate on core IT issues.

even though SaaS is garnering interest in the market, its mainstream adoption is abysmally lower than

on-premise deployment. Right now, I think it is a relatively small market. The

most important criteria for a CIO who wants to move to SaaS would be security, licensing and integration with other business applications — either in-house or third-

party applications. And another challenge would be vendor support.

In the financial services industry, I think the most important consideration for the adoption of any technology

is security. With SaaS, you entrust critical customer data to the vendor and expect the same level of data protection

applied to your on-premise enterprise applications. What if your vendor doesn’t have a foolproof security mechanism

in place? We are dealing with and are responsible for our customer’s money and are also governed by multiple

regulators. And therefore, I don’t think that it is enterprise ready for the industry we operate in. Besides, SaaS doesn’t

give us enough options to customize. Today, when we buy software we also have a support

model. So, if we have problems we can go back to the vendor but with SaaS we would be subscribing to a service from a

vendor who does not own the software but has the licenses. There might also be delays in responding to our service requests, which makes reliability an issue. If we plan to

implement SaaS for a critical business process, application uptime would be an important consideration.

The model has to prove its enterprise readiness before it enjoys mainstream acceptance.

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You would think that the people charged with conducting due diligence for a potential acquisition would subscribe to the adage, ‘Haste makes waste’. Long ago, I was involved

in an acquisition in which that saying was ignored, at great expense. It's a situation that's painful to recall but full of valuable lessons.

The target was a technology-based company. Its business involved receiving timely financial data over its own network, using proprietary software to analyze it and then providing the results to subscribers, again over its own network. The company's revenue stream was 100 percent dependent on properly functioning IT.

Despite that, my technology function was not represented on the ‘acquisition hit team’, as its members referred to it. I argued that my group's assessment could be crucial in such an acquisition, but the hit team's leader, an outside M&A consultant, replied that it wouldn't be necessary because he was comfortable with technical matters. He told me that he didn't have time to keep every internal technical, corporate and administrative function involved in every acquisition decision. I was a newly-appointed CIO, and seeing no support for my position, I didn't press the matter.

Clues One, Two and ThreeVery quickly, though, what should have been clear warnings about the dangerous ground we were treading started appearing. To make sure that the acquisition was under the radar of the business community, the hit team gave the target company the code name of Merry Widow. The

Al Kuebler Peer-to-Peer

Acquisition AngstA former CIO describes an acquisition disaster, and proves why IT must be a part of a diligence team in an M&A.

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team decided that the target should have a code name for referring to our company as well, and it thought it would be a sign of goodwill to let people at the target company choose one. Their response? Milk and Honey. Somehow, no one on our team saw the significance in how Merry Widow pictured us.

A couple of weeks into due diligence, Merry Widow's financial and growth indicators looked positive. Its profitability appeared stable and rising, if slowly, and surprisingly, its costs didn't increase with volume growth or with recent additions to what was offered to Merry Widow's clients.

At that point, Merry Widow told the leader of our acquisition hit team that it had been approached by another company interested in acquiring it. Merry Widow's response had been ‘not now’, but our hit team leader panicked.

He convened an urgent meeting with our president and general management team (which included me). He told us that he and his team were very positive about Merry Widow, and therefore not surprised that another company was sniffing around. Because of the risk that we could lose

the chance to acquire Merry Widow to a competitor, he suggested cutting the due diligence period from 90 days to 30 days! A couple of us on the management team wanted to take longer and err on the side of caution. We argued that we needed to fully understand this technology-based company before investing in it. A compromise was reached: that due diligence period was cut to six weeks. Merry Widow quickly agreed. Another clue.

The rush to glory became unstoppable. Due diligence was completed early. Offers were made and exchanged. Merry Widow rejected our ‘earn-out periods’ for key people; the owners of Merry Widow wanted their equity promptly, not drawn out over several years. Besides, another party was interested in acquiring them. Yet another clue, also ignored.

Finally, after a modest sum was set aside to deal with the cost of Merry Widow's integration, the acquisition was made, with some celebration.

Disaster StrikesThings unraveled fast from that point. Within a month, the two founders of Merry Widow and its CIO resigned. A senior manager from our company who was familiar with

technology was quickly appointed as CEO of Merry Widow, and he soon became cognizant of the extent of Merry Widow client complaints. More Merry Widow staffers resigned.

Shortly after that, operational issues surfaced as some subscribers complained that they were not receiving any services. At that point, our appointed CEO called in the cavalry from the parent company and asked for an emergency assessment of Merry Widow's IT situation.

It was when my team finally arrived on the scene that the ugliness of the situation became clear.

We tried to learn what we could, but technical staffers were practically rushing out the door by this time. Merry Widow's chief systems engineer had taken a leave of absence, and the CIO was long gone. With no one to ask, my staff and I looked at what was left. We found seven months of trouble tickets and changes that had been requested by clients, with no action taken. The network had no redundancy built in, so network failures required all hands on deck. But all that could be done was to apply Band-Aids and wait for the next crisis. The processing capacity was severely underdeveloped and could not be increased without major

expense. (At last, we understood why expansion had not resulted in significant cost increases.) For many months, the technical staff had been summoned to work through every weekend. IT staffers, burnt out from dealing with crisis after crisis, were resigning too fast to allow for their effective replacement. And since the people who originally developed Merry Widow's proprietary software were no longer around, there was no one left who knew what it did.

Merry Widow's newly appointed CEO wanted to know what it would take to fix the problem. The simple answer was that there was no overall fix. Some improvements were possible that would allow Merry Widow to maintain operations and customer service for a short time. The real problem was the proprietary software. It was no longer meeting clients' needs, but it could not be changed, maintained or reverse-engineered.

At another emergency session with the executive committee, Merry Widow's CEO summarized things, deferring to me on any questions about the state of the IT environment.

Painful as it was, it was agreed that we had transferred significant financial resources to others based upon an

Painful as it was, it was agreed that we had transferred significant financial resources to others based on an incomplete understanding of what we would receive in return. It was a hard lesson, but it was one we applied ever afterward.

VOl/4 | IssuE/132 0 M A Y 1 5 , 2 0 0 9 | REAL CIO WORLD



incomplete understanding of what we would receive in return. In the end, it was decided to remedy those short-term things that could be remedied and to disengage Merry Widow's clients (adding no new ones) in the most harmonious way possible. After about a year, Merry Widow no longer existed.

IT's RoleIt was a hard lesson, but it was one we applied ever afterward. Other acquisitions were explored in the years that followed, and those that were completed were successful. Plenty of times, we found ourselves dealing with forthright, responsible management teams on the target company side, but we were always prepared to find out something else and gave ourselves every chance to discover the worst. One way we did this was to always include the IT function in the acquisition team. There were no more surprises.

Of the many takeaways from this experience for IT leaders, I would emphasize the need to formalize your concerns. If you are an IT leader and you see risk, document it. It may not be in your position's description, but you have a responsibility to protect the stockholders' interests. Speak up and you'd be surprised how such input can focus the discussion and keep it on point.

The truth is rushed acquisitions are not rare. As a matter of fact, over the past 25 years as a consultant and senior IT manager, it's scary how often I've seen such rushed processes. The IT discoveries come too late, and still it happens. I eventually created the term ‘integratibility’ to help general management understand that it is essential that the targeted company's IT function be carefully considered during due diligence. The best outcome of such an assessment is that the IT environment is found to be reliable, reasonably compatible and well maintained and to have adequate capacity for the near future. Any other outcome needs to be fully addressed before completing the merger or moving on.

I wouldn't wish a Merry Widow on anyone. But even if you should encounter one, you can still deal with it constructively if the assessment is thorough and deliberate and includes IT. CIO

Al Kueblerhas been CIO at AT&T Universal Card, Los Angeles

County, Alcatel and McGraw-Hill and director of process

engineering at Citicorp. He is now a general management and IT

consultant. Send feedback on this column to [email protected]

VOl/4 | IssuE/13


It doesn't take a visit to your shrink to confirm what you feel in your gut each morning when you wake up — it's depressing out there. Market volatility, economic instability, pink slips and the ongoing threat of yet another round of IT

layoffs — no wonder you feel like diving back under the covers. If you've been let go, you might worry that you'll never work

again. If you've escaped a layoff, "it's very discouraging when you see colleagues leave because these people were your friends," says Beverly Lieberman, an IT recruiter and career coach and president of Halbrecht Lieberman Associates.

Employees may feel trapped in a company where "they're sort of grateful to be still working, but they're insecure" because virtually no employer is making job guarantees. "Everybody is saying you can write off 2009 because there are no signs it will get any better," Lieberman sums up. "We're praying for 2010."

But that doesn't mean you have to spend the rest of the year as an emotional cellar dweller. It's not easy, but it is possible for tech pros to nurture themselves and even bolster their professional credentials during these tough times, whether you're laid off and looking, or left behind and overworked. So how exactly do you go about staying up in a down economy? Here are some tips:

Return to Your RootsRemember why you first got into IT? Bring back some of that enthusiasm — and maybe even master a new skill — by doing something you'd never be assigned to do on the job, just for the sheer technological challenge of it.

Write a new program, fix one that's been broken and bugging you for ages, or master a whole new programming language. Or use your tech skills to connect with the world: build a Web site,

Julia King Career StrategiSt

The Peppy CIO Staying positive in this economy is an effort every IT leader must make.

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Julia King Career StrategiSt

create and post an original video on YouTube, or start a blog to share your IT views or showcase your skills.

Get the Most From Social NetworkingMaintaining a network is important in the good times, but being connected with friends and colleagues is more valuable now. So take full advantage of social networking opportunities via Facebook, LinkedIn, Twitter and other online communities.

A network of contacts can yield advance notice of a company that's hiring — or laying people off. More broadly, social networking can help you read the tea leaves about the health of various verticals (for example, if several of your contacts recently found work in health care or switched out of manufacturing).

Finally, simple human interaction can be uplifting, even if it is electronic. Reconnecting with college buddies and old co-workers won't necessarily help your career directly, but it can do wonders for your outlook by reminding you who you were before you felt like you were nothing but a job or a job search.

Get Out into the Real WorldIf you live near a university, check out its technology-transfer center. These are official, university-supported incubators for technology research and start-up tech companies. Personnel

in technology-transfer centers excel at helping people sell the business benefits of technology — a skill that IT professionals could often use help with as well.

"People in IT do not know how to sell themselves. When you look at programmers' résumés and how they interview, they talk about their skills in technical languages," says Nagesh Belludi, a software engineer and program manager who also regularly counsels IT professionals.

"They don't explain that a project they worked on saved their company hundreds of thousands of dollars or what the business benefits of a project were."

Beyond that, if you want to strike out on your own, small-business associations are also good bets. The beauty of smaller associations is the opportunity to meet people face-to-face.

Improve Your Soft SkillsWorking on your communication, negotiation, relationship-building and presentation talents — the so-called soft skills — can maintain your sense of self-worth now and help you nail a promotion or land a new job further in the future.

Courses are widely available at low cost at local adult education centers. Practice the skills you learn as well. Write reviews for Amazon.com — reviews of IT-specific books or any

other book or product that excites you. Think of your reviews as an opportunity to practice your writing plus get a little visibility in the process.

Or go a step further and submit a written proposal to speak at a professional association meeting, advises Naomi Karten, a career coach and author.

These groups are always seeking speakers, and they can benefit from your wisdom and lessons learned. Being on their agenda creates professional connections that can prove useful, and it also adds a credential to your résumé.

Get SmartKeep sharp mentally and position yourself for the economic upturn by pursuing technical certifications and learning new technical and business skills now. If you've been thinking about a bachelor's or master's degree, for example, now is the time to enroll. Enroll in an MBA program or go after that master's degree in computer science you’ve thought you needed.

Another, more affordable, option is to attend webinars hosted by vendors, consultancies and research firms on a weekly basis, often at no charge. Doing so can help you feel less isolated and more in touch with the world outside your office. Webinars can help you stay abreast of the latest tech trends, and they're an

excellent option for the overworked IT pros whose company budgets no longer allow for formal training.

Don't Take It PersonallyThis downturn is affecting companies in every sector and employees of every rank. As companies cut costs, they're forced to either overwork or lay off experienced, highly-qualified IT professionals who have done nothing but superb work.

For people still on the job who find themselves constantly worrying about when and where the axe will next fall, Paul Glen, an IT management consultant and the author of Leading Geeks: How to Manage and Lead People Who Deliver Technology, has this advice: "Worry about things that are in your control only. Don't watch too much news. It just introduces hysteria. Look around your business to understand the real risks."

If you've been laid off, remember, it's not you; it's the economy. "Being laid off is never considered a negative when managers interview these days," says Belludi.

"So IT folks should be candid about the fact that they were laid off," he says. "We ask [candidates] what lessons they've learned and what takeaways they have from the problems they've experienced while being laid off." CIO

Send feedback on this column to [email protected]

Companies are being forced to lay off highly-qualified it professionals who have done nothing but superb work. if you're one of them, remember, it's not you; it's the economy.

REAL CIO WORLD | M A Y 1 5 , 2 0 0 9 2 3Vol/4 | ISSUE/13

Coloumn - 02_The Peppy CIO.indd 23 5/12/2009 6:32:56 PM

Improving business-IT alignment and demonstrating the value of IT are top priorities for CIOs, with many of them chronically relegated to playing catch-up to the business’ expectations and struggling to justify IT costs.

Part of the problem is the lack of clarity about the ownership of the IT governance process. This sounds like it's the responsibility of IT. In too many cases, business executives make the mistake of delegating their responsibilities to IT, leaving it up to IT to determine which projects to work on and in what order. The lack of business leadership triggers a so-called vicious circle of alignment leading to IT's gradual marginalization, characterized by:

The business doesn't feel comfortable making IT decisions. In the absence of a coherent picture of the existing and planned technology investments, many business executives delegate key technology decisions to IT.

IT makes decisions it shouldn't make. Without a clear mandate and strategic directions, IT executives, often acting from inside technology silos, make decisions they shouldn't make, for example, which investments should be shared enterprisewide, how good IT needs to be, or whom to blame when IT does not deliver.

IT doesn't deliver the expected business value. IT services delivered from technology silos that act without a clear business mandate can rarely provide a coherent picture of the use of technology in the enterprise. And in the absence of such a picture, the business will not feel comfortable with IT.

It’s All About Business LeadershipThe increasing pervasiveness of IT, whether processing transactions in the back office, enabling e-commerce or

Alexander Peters and Craig Symons IT GovernAnCe

Business-led Governance IT governance is essential to align technology with business. That is why it is critical that business takes control of it.


Coloumn - 03_Who Should Push Play.indd 24 5/12/2009 6:34:07 PM

Alexander Peters and Craig Symons IT GovernAnCe

providing competitive differentiation, has made IT an integral part of the business. Firms thinking in these terms recast IT governance as the business governance of IT.

They put IT and its governance on the agenda of board of directors meetings. Because of the important role that IT plays today as well as the potential risks ranging from data theft to huge project failures, IT governance becomes an integral part of enterprise governance. CIOs in these organizations look to the board to provide objectives for the enterprise's IT and regularly report to the board on the status of IT. The board expects that IT:

Will deliver the necessary solutions on time, on budget, and of sufficient quality.

Will exploit IT to deliver business value. Will leverage IT to increase the overall efficiency and

productivity of the firm.If your organization is not there yet, consider:Enlisting the board of directors. Educate the board about

the critical role that IT plays in enterprise strategy and in today's environment. The goal should be the formation of an IT strategy committee as a regular standing committee of the board that will be responsible for overseeing IT's performance.

Establishing IT steering committees to make decisions about IT. While the board sets overall strategic objectives for the enterprise, IT steering committees make the important decisions relating to investments in IT. These steering committees may be chaired by the CIO, but their membership is comprised of executives representing an organization's major business units.

Steering committees initially decide which IT investments to pursue and then prioritize them based on business need and resource availability. The steering committee also monitors the IT investment portfolio on a regular basis and makes further decisions should circumstances dictate, for example, whether to terminate an investment initiative that was no longer expected to meet its benefit goals.

Educating the senior business leadership team. Once the board of directors is up to speed, it’s the turn of the senior business leadership team. The aim is to form an executive IT steering committee. Initially, the steering committee should focus on clarifying the business strategy and the role that IT will play. Over time, an investment management process must be developed that includes standardized business case templates.

Getting senior business executives to sponsor key programs. Most IT investments today are more than just technology; they are almost always better described as IT-enabled business change, since their success relies on more than just an IT solution. Often they will require business process changes, behavior changes in workers, and training

in the use of a new system, all of which are beyond the control of IT. Consequently, they need to be managed as programs, a collection of projects, some of which may be owned by IT and some by the business sponsor. By requiring senior business executives to sponsor key programs, organizations place accountability and responsibility for success directly on the shoulders of the person who will reap the benefits. Senior executives have the vision to ensure alignment and the ability to commit the necessary resources.

If you aren’t there yet, try using the IT steering committee to evangelize program management as opposed to project management. Each proposed IT-enabled business change investment must include the entire range of activities required to attain the benefits as part of the business case. Business ownership must accept accountability for benefits realization and therefore sponsorship. The Val IT framework (for IT portfolio management) provides a detailed road map for education and implementation.

Shifting IT Value Measurement When the business becomes engaged through IT governance, it becomes apparent that what were once thought of as IT projects are really IT-enabled business change programs. With the benefits accruing to the business, it is only natural that the business should be accountable for attaining the value. When this happens:

IT and the business become more aligned. With the business actively engaged in governance, there is a tighter linkage between business strategy and the IT portfolio because the business is now calling the shots and being accountable for the outcomes.

Program success rates go up. The ratio of projects and programs that meet or exceed their expected returns improves as a result of executive involvement, performance measurement, and accountability.

Business results improve. Research has been able to demonstrate that organizations that practice good IT governance have better overall financial results than similar companies practicing similar strategies. CIO

Alex Peters and Craig Symons are Principal Analysts at Forrester Research. Send

feedback on this column to [email protected]

When the business becomes engaged through IT governance, it becomes apparent that what were once thought of as IT projects are really IT-enabled business change programs.


Coloumn - 03_Who Should Push Play.indd 25 5/12/2009 6:34:07 PM

After earning his MBA, R.K. Upadhyay, Deputy GM (IT & BD), BSNL, helped zero

in on business opportunities.


Sc hooled

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Reader ROI:

The importance of CIO development for organizations

How an MBA program can help

Why the CIO is a cross-functional role

Cover Story | Management Skills

Why an MBA can bring out the business leader your company needs you to be. By John LamB

After four dAyS of potholing, moving barrels across imaginary ravines and trying to map-read their way around the Herefordshire countryside, the pressure on the group of trainees was beginning to tell.

The military-style program was designed to foster leadership skills and demonstrate the dynamics involved in group working. “Form, storm, reform, perform,” the instructors explained.

The group seemed to have got stuck in the storming stage, or that is how it seemed when one member, a local authority IT manager, tipped over a table in frustration during a particularly tense discussion and was led from the room by the course leader, an ex-SAS officer.


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Why an MBA can bring out the business leader

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Vol/4 | ISSUE/13

Courses on leadership are more popular than ever as organizations seek to equip their IT bosses with the skills to cope in an increasingly complex environment.

Personal development is about helping individuals become effective leaders able to set direction, persuade others to follow

and deliver IT benefits to the business. But no matter how inventive the training courses on offer, many CIOs, like the unfortunate delegate in Herefordshire, are struggling to apply them to the practical problems of running an IT department.

Before he enrolled himself for an MBA at IIM Bangalore, r.K. Upadhyay, deputy gM (It & Bt & Bt d), BSnl, — an IIt roorkee product — was a self-confessed technoholic.

But that was also before many of his It initiatives, like scrambled t initiatives, like scrambled tjigsaw pieces, refused to form a

picture he wanted: to use It to t to trun a successful business

. “A management degree changed that,”

he says. I could look over an entire process and

re-engineer it to get the best now

I have all the perspectives: finance, marketing, and even

hose perspectives have come handy, especially the human ones.

When Upadhyay decided to enhance employee

productivity, he designed a matrix

for seven of BSnl’s area managers and

used reports to create comparative graphs for these managers. Soon, those at the bottom end of the scale got uncomfortable enough to identify problems within each of their divisions and look for remedies. “And when we gave access from home,” he continues, “we found a lot of people logging in after-hours to find out where they were not doing well. It was a management act, completely transparent, and it helped performance.”

having a management education also allows CIos meet that ever-important directive: make the business’ customers, your customers. In Upadhyay’s case, getting an MBA bolstered his ability to work with data mining tools and understand BSnl’s customers better. normally, between an It leader who knows t leader who knows this way around a BI tool and the business which recognizes data relationships that have hidden treasures, much can be lost. With Upadhyay there’s much less chance of that happening with BSnl’s two-lakh-plus subscriber database, as he tries to figure, for example, why some customers are moving out from BSnl.

Upadhyay says that his education has also helped him cut cost prudently and in line with the telecommunication giant’s strategy. “If I am required to do cost-cutting, I need to learn to measure cost first. I also need to be clear on the relation cost has with strategy. It has access to this information and it is best if a CIt has access to this information and it is best if a CIt o plans cost- cutting strategies,” Upadhyay says.

Upadhyay’s interest in strategy led him to pursue a doctorate in corporate strategy, which he is currently engaged in. “Business is like war — even when the fight is unequal, you can still win if you have a better strategy,” he says. According to him, subjects like branding — which forms part of his research — stand a CIo in good stead.

“It is important how services, even if they aren’t very good, are positioned in the market. take the numerous telecom plans for take the numerous telecom plans for texample. When we noticed that 83 percent of our mobile services were used within the state (Karnataka) and only 17 percent were going outside, we decided to reduce Std tariffs and increase the local tariff by 10 percent. It was a net gain and the customer only perceived a reduction in prices. By and large, these ideas will only come to a CIo if he has some idea of how brand management works,” he says.

It’s important to note how, in many enterprises, similar data runs past the CIo, but opportunities are lost because business isn’t aware of them or is too busy, and It doesn't know how to take t doesn't know how to take tit forward — like build a business case around it. If that misfortune hasn't hit BSnl, it’s because Upadhyay is qualified to take action on the data he sees. And business trusts him to run with it.

— Kanika goswami

Why BSnl’s deputy gM of It and business t and business tdevelopment thanks his management education for his ability to see business and cost-cutting opportunities.

the MBA


When IT management organization CIO Connect asked 28 of its blue-chip company members about the importance of training and development, they all said it was critical to have plans in place for both themselves and their teams. About two-thirds said that they had benefited from such programs.

jigsaw pieces, refused to form a picture he wanted: to use I

run a successful business at BSnl. “A management degree changed that,”

he says. I could look over an entire process and

re-engineer it to get the best business advantage.

I have all the perspectives: finance, marketing, and even

the human view."those perspectives have come

handy, especially the human ones. When Upadhyay decided

to enhance employee productivity, he designed a matrix

for seven of BSarea managers and

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REAL CIO WORLD | M A Y 1 5 , 2 0 0 9 2 9

But the survey went on to reveal an alarming gap between these good intentions and the reality of training in these firms. Nearly half the CIOs polled did not think their existing plans were good, and 14 percent considered them inadequate.

For CIO Connect members, the priorities for personal development were influencing boardroom colleagues and building commitment to IT across the organization, although, worryingly, respondents did not give their own needs a high priority.

“Training is not a strength,” of some economies agrees Alistair Russell, development director at CIO Connect. “It is an important lever to effect change but, unfortunately, it is not always accepted as a significant one. There is an opportunity for us to do more.”

Russell runs CIO Connect’s program for training the CIOs of the future. “Personal development only has an impact if it changes the way an organization works,” he says. “There is no use in building a CV with qualifications just for the sake of it.”

His program is a mixture of one-to-one coaching and group working on real problems. “Leadership is situational: You don’t get to be there by being like someone you worked with,” he says.

“Different circumstances call for different kinds of people. Talking in the abstract is only partially helpful: You also need feedback in the heat of the moment.”

Russell thinks that around five percent of a CIO’s time should be spent thinking about how he or she is doing their job. He himself spends around an hour each week going over issues in his own working life.

“At a senior level you are very pushed for time so development is about making choices about how you spend what free time you have.

“There is a difference between a one-shot course and development sustained over a period of time,” he says.

Chris White, CIO at international corporate law firm Ashurst, agrees. He is putting his team leaders through a program called One Team, designed to foster better communication in his department. The program involves three or four residential sessions. “Often, people come back from a session enthused but then fall back into their old ways. One Team is a way of keeping the initiative going,” he says.

The program, which is driven by attendees, has paid off by breaking down communications barriers that had built up because the department is split between two sites. It also enabled the law firm to implement a document and e-mail system with far less hiccups than might otherwise have been the case.

Out and AboutCommunication skills are important to Richard Snooks.

Today, professionals from diverse backgrounds are taking charge of It. t. t they aren’t necessarily tech geeks with engineering degrees tucked under their belt. the new-age enterprise is a

synergistically integrated business unit where growth is fuelled by all key drivers — including It.t.t

Which is why It cannot work in isolation; it is a co-creator of t cannot work in isolation; it is a co-creator of tbusiness. As the head of It, the CIt, the CIt o is a strategic partner and is integral to delivering business objectives. hence a CIo is required to consistently devise winning strategies to align It’s competitive advantages to business objectives. Achieving this feat is hard when you are conducting business in a dynamic environment. you need to you need to yappreciate business fundamentals and know the leverage points of your industry, the market’s challenges and it’s opportunities.

CIos cannot merely be technology experts. they are executives with wide-ranging It knowledge, with the savvy to apply it to a business’ t knowledge, with the savvy to apply it to a business’ tstrategic objectives and the communication skills to sell their ideas. A CIo’s role touches four distinct areas: leadership, management, people and strategy. A CIo has to deftly juggle all these areas.

A CIo should also have the business acumen to enhance the competitive posture of his organization. hence acquiring a management degree has become a prerequisite for CIos. Management training is a critical additional skill for a CIo who wants to drive growth.

Although he doesn’t hold a formal management degree, Anil Punjwani, It head, Philips Innovation Campus, upholds the teachings of an MBA course.

the Acolyte

“There is a difference between a one-shot course and development sustained over a period of time,” he says.

Chris White, CIO at international corporate law firm Ashurst, agrees. He is putting his team leaders through a program called One Team, designed to foster better communication in his department. The program involves three or four residential sessions. “Often, people come back from a session enthused but then fall back into their old ways. One Team is a way of keeping the initiative going,” he says.

The program, which is driven by attendees, has paid off by breaking down communications barriers that had built up because the department is split between two sites. It also enabled the law firm to implement a document and e-mail system with far less hiccups than might otherwise have been the case.

Out and AboutCommunication skills are important to Richard Snooks.

training is a critical additional skill for a CIo who wants to drive growth. Vision is a core competency for a CIo. he must be a proactive change agent who can deliver a

transformational change. As a change manager who leads It-driven business initiatives, a CIt-driven business initiatives, a CIt o has to possess persuasive communication skills. A management qualification enhances this capacity and hones the skill to decode resistance

effectively. A CIo equipped with an MBA is more likely to be able to compellingly

(Continued on Page 16)

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When he revamped the IT department at advertising agency WWAV Rapp Collins, he adopted the organization’s creative approach to business. “The skill a technologist really needs to acquire is how to communicate,” he explains. “I have always been quite confident as a communicator.”

Instead of looking for technically qualified individuals, Snooks sought out bright communicators. Many of those he hired had little or no IT background, and one had just gained a PhD in music.

“People coming through university on a computer science course are often least equipped to make a good contribution in the IT world,” Snooks says. “The strategy showed in the attitude that the business had to the IT function. We were seen as an integral part of the business. A lot of good IT teams are now thinking this way.”

Snooks now sets aside a day every four months or so to meet other CIOs who are members of a network that he belongs to, set up by a training firm called IT Leaders. They spend time exchanging experiences and exploring management tools and techniques. “The more senior you are in a role, the more lonely it is, and the more you need people to talk to,” he says.

On a recent away-day he and his group looked at neuro-linguistic programing, a method of making emotional and behavioral changes in yourself and in other people. However, Snooks acknowledges that some employers may see personal development as a luxury. That is a mistake, he maintains, since there is always a balance to be struck between doing the job and learning how to do it better.

“Personal development is something that’s been neglected in the past,” Snooks says. “A lot of management is based on intuition, but being an effective leader is about psychology: understanding people.”

In his early days, Snooks read self-help books like Kenneth Blanchard’s The One Minute Manager, designed to help people like him improve their management skills, but he knew he needed more. “As I became more senior, I realized I needed to get away from the office to get a better sense of objectivity about my work,” he says. “I wanted to discuss issues with like-minded people in a training environment.”

Today, as CIO at property investment company Capital & Regional, Snooks went out and formed relationships with his contemporaries — even those who worked for competitors. He also developed close relationships with two people in his own firm — a human resources manager and the chief executive of another division of the company who had “made considerable progress in how he communicated with people and took them along with him”.

Personal development has convinced Snooks that ‘managing by walking around’ is the best way to do things.“It is important to make sure you spend the biggest part of your time focusing on


articulate corporate strategy. Being a transformation agent, he has to have an executive level perspective. An MBA education offers that broad perspective. this ensures that a CIo’s change initiatives deliver maximum business value.

A management education also broadens the business insights of a CIo and familiarizes him with business fundamentals like accounting, hr, corporate strategy, risk assessment and cost-benefit analyzes. It makes him financially astute. Understanding the ground rules of finance is an absolute given for a CIo today. there is no way you can sell an It project if you are not articulating it in financial lingo. Financial incisiveness helps a CIo make more accurate roI calculations. this ensures that he gets business buy-in with less difficulty. And if a CIo maintains a keen eye on the financial engine of his organization, he inspires trust in his executive peers.

CIos who possess solid management credentials are recognized by their executive peers as someone who is exposed to the economics of the enterprise and the brass tacks of finance. this boosts their acceptance in the boardroom. It acquaints them with the intricacies of internal collaboration, business processes, market dynamics, the competitive landscape and customer behavior. they learn to analyze a problem from multiple angles. Acquiring this understanding helps them generate business solutions. It also fosters the development of a shared vision for business.

despite all of this, I don’t think it is mandatory for a CIo to have a formal MBA. Informal business activities like training sessions, seminars and workshops can also inculcate a strong business sense within CIos.

—As told to Sneha Jha

“As a CIo, I should already understand business, otherwise I’m a wrong

hire or promotion,” says Alaganandan Balaraman, VP hr & process architect at Britannia Industries.

he says that having management perspective is what differentiates CIos from Ctos. But wait, there’s more.

At Britannia, everyone who forms part of the executive committee is expected to help with any business decision. the idea, he says, is to bring everyone’s experience and knowledge to bear — not necessarily their functional expertise. this is different from everyone stating how a certain move would affect their department.

that cross-functional responsibility should extend to any CXo anywhere — including CIos. the CIo, he says “is a leadership role. It’s about business, it's about growth, it’s about improving quality of operations, providing better customer satisfaction, these are roles that anyone in the C-suite has to worry about,” he says.

the Strate gist

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communications, empowering others and delegating responsibility. Don’t waste your time on 150 e-mails. More people should be out of their chairs, moving and shaking; talking and influencing people.”

Business-IT BridgeRené Carayol is one person who could never be accused of sitting behind a desk. The dynamic CIO turned management guru fills his time writing, broadcasting and teaching. He acts as a mentor to some 50 people involved in IT.

His early career followed a classic path from analyst programmer to CIO and finally chief executive of a dot-com company. Although he was technically skilled, the

younger Carayol completely lacked business knowledge and leadership skills.

So when he joined the board of Pepsi after a 10-year stint at Marks and Spencer, he knew nothing about business and couldn’t even read a balance sheet. His first board meeting was a fiery one as the soft drinks company discussed splitting off from a joint venture with Whitbread.

“I was intoxicated, but I never said a word,” he admits. At the end of the meeting, the chief executive drew Carayol aside and demanded to know why he had not contributed. “I explained that no one had mentioned IT. He told me that I was not responsible for IT; I was responsible for the day-to-day running of the company.”

Vol/4 | ISSUE/13

Alaganandan Balaraman, VP hr & Process Architect at Britannia Industries says that CIos are part of the C-suite and must therefore work across functions — which is hard to do without an understanding of management.the Strate gist

But if CIos are to contribute to this level, if they are supposed to work across functions, they must have a thorough understanding of the business.

take for example, the challenge Britannia faced with its take for example, the challenge Britannia faced with its tpromotions. like many other business processes, creating a promotion requires many departments to pull together quickly. In Britannia’s case a promotion could require a change in packaging with an additional label if something came free with a packet of biscuits. the free product itself would need to be sourced, involving the purchase department. It would require knowing where and at who the promotion was being targeted, engaging marketing. then sales would have to figure the promotion’s impact on the market. And inputs from the planning department would ascertain which factory would be used and where the bundling of the two products could take place.

to do this more smoothly, Balaraman was tasked with creating to do this more smoothly, Balaraman was tasked with creating ta process that cut across departments, something he says happens a lot in business: “If you are in the C-suite, running a business is about integrating different parts; it's about synthesis.”

Balaraman says he could have approached the challenge purely as a facilitator who knows how to handle people. But then he says that he wouldn’t be able to know if he was pushing enough. “Say sales claims ‘we can’t give you this information three weeks in advance, only one week.’ to which purchase could say, ‘I need this to which purchase could say, ‘I need this tmuch lead time. If you can't give it to me, then I can’t supply.’”

It’s a practical problem and a lack of understanding of how each function works — a lack of management training — could


Carayol knew he needed to learn fast. He found a business mentor called Donald Harris, who was 30 years his senior, and the pair met each month to discuss Carayol’s career and the insight he needed. One thing Carayol learnt was that while he was good at the big picture he was not so hot on detail.

Leadership, he says, is about finding your strengths and weaknesses and building on the strengths.

“Don taught me how to be a board director. Everywhere I went after that I found a mentor. These people are flattered to be asked. They will become your critical friend: someone who sits inside your tent and says the things to you that other people won’t,” he explains.

& Process Architect at Britannia s are part of the C-suite and must

therefore work across functions — which is hard to do without an

leave someone like a CIo running back and forth between departments, wasting precious time. “Each department has its own perspective, and someone needs to synthesize those views — and it helps a great deal if you have an understanding of all their problems,” he says.

Without an MBA, the process he created could have taken much longer, just like learning management from the school of hardknocks takes longer than formal training. “Sure you could jump into the water, paddle around and over years pick up swimming — or you could go to a swimming coach,”he says.

—By Sunil Shah

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The TeachingDavid McKean, 10 years a CIO and now head of IT Leaders, says leadership development may be a status thing, particularly when it comes to qualifications like MBAs, but in reality it’s about developing existing skills and pooling knowledge.

IT Leaders is at the sharper end of the development business. McKean teaches project management methodologies such as the Information Technology Infrastructure Library (ITIL) and Projects in Controlled Environments 2 (Prince2).“We spend about 20 percent of our time on these tools. They are important, but they are more about training than development.

the idea of changing the way IT behaved. “IT reported to finance and we were seen as the people with the screwdrivers at the other end of the phone. I said it was time the IT profession changed and my boss Neil Slater said ‘come and do it for me’.”

In 2005, Unilever was undergoing a re-organization and the future of the IT department was under discussion. The company’s senior management in Europe wanted to create a group of internal consultants with specialist skills. “You could say they already existed in the organization, but they were doing other things. We needed to define this role.”

Beck devised a strategy that would turn out people who were capable of managing relationships, who had IT consulting skills and who were confident in their abilities. “It was not a course but a change program,” he declares.

With the help of three commercial training companies, Beck created a program consisting of four modules. The 800 IT leaders taking part were to start on personal development and relationship management, before moving on to IT consulting skills. The third module would tackle account management, with the final part focused on business process reengineering.

“The very first thing we do is personal development,” says Dominic Turnbull, managing director of the McLane Group, which worked with Beck on that portion of the program. “You are dragged onto the pitch and invited to expose yourself. We ask people to reflect on situations when they were at their best, and three or four disappointments.”

So far around half of those taking part have undergone the first module and Unilever will begin rolling out the second module next year.

The price tag for the program has been relatively low at under £500,000 (about Rs 40 crore), because Unilever has done a lot of the training itself. In Europe, groups of 20 or so trainees have attended Unilever’s management development centre in Surrey. The program has also been run in Brazil, North America, Singapore and South Africa.

What results has the transformation program achieved so far?

However, there are still a lot of people who don’t know about them — about 60 percent of those who attend.”

Broader-based leadership skills are also on the agenda. McKean introduces delegates to scenarios involving teams, co-workers, innovation and change, crises, corporate governance and strategy. Trainees are instructed in emotional intelligence and corporate politics and are introduced to management techniques such as the balanced scorecard and the McKinsey 7-S model.

“Very few people have the skill of developing strategy in a step-by-step way,” says McKean. “You have to align your IT strategy with the business. We tell people what they should be asking from the business.”

One of those requests is for the CIO to have a seat at the top table. “The reason IT should be on the board is that constant alignment needs to be made between IT and the business. IT’s role is not to lead, but we teach CIOs the interaction points along the way,” he adds.



McKean has had his successes. One CIO, who was keen to exert more influence in his organization, recognized that his problem lay in being physically too remote from other executives. After three or four weeks of discussing his predicament with his trainers, he spotted an opportunity to move his desk to the top floor.

“It’s about confidence,” says McKean. “You need to look for small victories that will build your confidence. It is still as political as ever and there are still the same number of places in the inner sanctum. If IT is in there, someone else is out.”

The Power of Development When Unilever wanted to improve how its 3,000-strong IT department was viewed by the rest of the business, the firm embarked on a massive personal development program aimed at changing how its technical people behaved.

The problem for Unilever was that IT specialists tended to act as technical flunkies, doing the bidding of the company’s business managers even when those managers were not best equipped to make decisions about IT. Unilever wanted an IT function that acted more as a business partner to the departments it served, understanding their problems and making suggestions about how IT could solve them.

“We wanted to change the IT mindset, to create IT relationship managers or IT liaison managers,” says Daryl Beck, who devised the change program and has the title of director of IT excellence at Unilever.

It was while he was running Unilever’s IT operations in Arabia that Beck conceived

Some CIOs acknowledge that employers see personal development as a luxury. That is

a mistake since there is always a balance to be struck between doing A job And

leArning how to do it better.

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“In pockets it has been better than expected,” says Beck. “In pockets it has been disappointing. Success is when we get invited to talk about functional strategies and we have seen that in some areas, which says

to me the business is starting to realize you can’t go ahead without IT so let’s invite them into our conversation.” CIO

Send feedback on this feature to [email protected]

rishikesha Krishnan, Professor, Corporate Strategy & Policy Area, IIM-B, tells you the importance of management — and why you really don’t need an MBA.the Guru


What important change can a management degree create in a leader like a CIO?

to be a good management person in addition to being a to be a good management person in addition to being a tgood technology person, CIos essentially need to develop the understanding that organizations are not machines. they don’t run like machines and cannot be treated like one. organizations consist of human beings with all their feelings and emotions, and therefore all changes require understanding human behavior well. I think, in a sort of practical manner, they know this, but to know it and realize it and do something about it, are two different things. Also, thinking like a strategist is an important takeaway.

Do you see a growing number of CIOs opting for a management degree?

I don’t see a big number. But they do show a strong interest in management. If you look at any CIo event, you will see a lot of interest in management subjects, and most say they want to learn more about management, rather than technology because they believe they know that subject fairly well.

It’s also interesting to note the s who have not

necessarily become CIo through the technology route. there are MBAs — who may not have started with a technology background — who have

What drives their interest? CXO pressure or the chance to

move beyond CIO-dom? In any job, if you want to have more

impact, you will realize very

soon that you need to understand the business well. I think that is what is really pushing CIo interest in management. For instance, if a CIo wants to introduce a new system, there are change management issues that creep in and unless CIos can overcome these, they will not be able to implement that system effectively. Clearly, most CIos realize that It is a small part of their job. they are beginning to see that organizations will change and getting people to change their behavior and practices, becomes the bigger obstacle to effectiveness.

As a means to further their career — I am not sure about that. generally, if you look at the specialized functions in any organization, there are not too many who will get a higher opportunity.

Are management degrees required for CIOs? Can’t they pick management up on the job?

they probably can. Many CIos should be able to pick up some kind of information and meet ‘the need to know’ without any kind of a formal education. While they may not need a full-fledged management degree, a short, focused course could be useful. I think even an e-learning platform would suffice.

As a professor, if you had to create a short module, what would it focus on?

In the top-three most-important subjects for any module, I In the top-three most-important subjects for any module, I would rate understanding individual and team behavior within the organization — what is conventionally called organizational behavior — as the first. that’s the most important thing. the second and third, which are probably equally important, are finance and marketing. Finance would help CIos make a convincing case for roI and marketing would be important in selling their ideas to other stakeholders and getting the buy-in from other CXos.

—Kanika goswami

Vol/4 | ISSUE/13

It’s also interesting to note the number of CIos who have not

necessarily become CIthe technology route. are MBAs — who may not have started with a technology background — who have

become CIos.

What drives their interest? CXO pressure or the chance to

move beyond CIO-dom? In any job, if you want to have more

impact, you will realize very

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Getting an MBA is hard work; it takes time, money and plenty of effort. But it could just be the thing you need. By Thomas macKay

Ten Reasons toEnrollin an MBa


It gives you credibility with your business peers.Having an MBA demonstrates your commitment to the business because you've invested the substantial time and energy required to obtain the degree. It shows that you value the business perspective and recognize that the technology you implement, support and develop is intended to enable business activities and is not an end in itself. An MBA also indicates that you've mastered a certain level of knowledge in business management, which gives you the ability and confidence to speak on equal terms with executives outside of IT. Because IT touches nearly every part of the modern business enterprise and because IT leaders are increasingly involved in business processes, the MBA adds credibility to your perspective when you're


ThErE arE Many rEasons why executives feel the need to get themselves a management degree. But few are as compelling as when it comes from an IT leader. Here, Thomas MacKay, assistant director of IT at Christopher Newport University talks about the authentic business boost an MBA gives to an IT management career and his ten-point argument in favor of earning an MBA.

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discussing technical solutions to business problems with your colleagues.

It teaches you to think like a business person.As technologists, we're used to thinking in a linear and logical fashion: “If this, then that.” This logical mindset is essential to writing good software, troubleshooting technical problems and managing projects. Business people, on the other hand, tend to think in terms of strategies and value, and human (customers and investors) reactions. The business perspective, by its nature, tends to rely more on estimation and trial and error. The ability to think like a business person is critical for technology leaders, especially those of us who wish to position IT strategically within the company. We need to know how to plan, design and build an information architecture that is capable of supporting the business as it adapts to a changing marketplace. Without this business mindset, a CIO is at risk of creating an IT department that is too rigid, too slow or too restrictive to fully support the company’s needs.

An MBA teaches you to look at problems and opportunities holistically. It also provides analytical frameworks, such as risk assessments, cost-benefit analyses and strategic plans, that you can apply to any problem or opportunity you encounter, whether in or beyond IT. The business mindset that an MBA gives you becomes habit because you use those frameworks repeatedly in a rigorous academic environment, and you see how they can be applied in a variety of situations from one course to another.

An MBA is your ticket to the inner circle.Many CIOs are concerned about not having a seat at the table. That's because IT is often regarded as tactical and not strategic, and because business leaders are not usually ready to talk about tactical technology solutions in the early stages of planning any business initiative. If you as an IT leader have an MBA, you're seen as having more to offer than just your knowledge of technology.

Indeed, you do have more to offer because you possess that broad business mindset, and your colleagues recognize your value by asking you informally for your perspective on their problems and formally to lead up committees that aren't technology-related. For example, I recently had a conversation with the associate vice president for auxiliary services at Christopher Newport University. He was trying to determine the best locations for serving lunches to students based on where they lived. I suggested that he might be better off syncing up lunch locations with the places where students had classes around lunchtime. He liked the idea and wanted to move forward with it. We then began to discuss marketing and sales analysis ideas for the university bookstore.

My exchange with the associate vice president for auxiliary services is notable not because my idea was so brilliant, but because the conversation happened in the first place. When you have those conversations with your business counterparts and start offering insight, they will think of you the next time a strategic issue comes up and they'll be far more likely to get you involved in conversations early on. I've experienced that at Christopher Newport University and at my previous employer, the College of William and Mary, where I was asked to lead an effort to develop a formal donor-prospecting process for our fund-raising efforts. This process was a hugely critical component of an impending fund-raising campaign. Even though this process wasn’t technology-based, I was asked to lead it because of the credibility I had as a business person.

You will communicate better with your business colleagues.IT professionals use a lot of jargon as shorthand when we’re communicating among ourselves: RFID and WEP, access

points and ACLs, object code, executables and DLLs. Each of the business functions (such as sales, marketing, accounting, auditing, risk management and human

resources) has its own jargon, which represents equally complex ideas or processes. In business school, you learn the distinct languages of those functions. You learn, for example, the difference between cash-based accounting and the accrual method, earned value and net present value, suspect and prospect, guerilla marketing and viral marketing, and situational interviews versus behavioral interviews.

When the CFO of Christopher Newport University discusses with me the cost of switching from a cash-based accounting method to an accrual method, I know she’s referring to the large write-off associated with booking expenses and income when they are incurred as opposed to when money changes hands. I understand that this one-time expense occurs because we’d have to book a bunch of expenses in the current year that normally don’t get booked until the next year. And I know this because I learned in business school what the terms mean as well as the implications of each approach. My knowledge of different accounting methods allows me to be an active participant in business conversations. The CFO doesn't have to explain things to me. Even better, I don't have to nod my head as if I understand what the CFO is saying, only to Google the terms later. More importantly, I can use the business function's own terminology to explain to my business colleagues the impact of technology. Using a language with which they are comfortable makes it easier for me to explain technical details to them and to get their support.

Finally, the MBA experience will change the language you use in conversation with business people. Before I got my MBA I’d enter a conversation by asking, “How can we solve this problem with technology?” Now I start by saying, “How does it make sense to solve this problem?” because technology isn’t the solution to every problem.

An MBA better prepares you to solve business problems.When we were in the process of implementing credit card processing on campus at Christopher Newport

Reader ROI:

What an MBA program can give you

How an organization can benefit


University, we discussed the impact credit card processing would have on the general ledger and the reconciliation process — and I'm not lost. Because I studied accounting in business school, I can assist with technical and process automation solutions because I know what the university is trying to accomplish, what can be automated, and what needs to be reviewed and audited. Thus, I've made meaningful contributions to this project.

You'll learn how to read and interpret business statements.The MBA curriculum teaches you to understand and interpret financial statements, marketing plans, market analyses, audit reports and business development plans. Knowing how to read a financial statement is important when, for example, you are evaluating a vendor's financial health. Knowing how to interpret marketing plans and market analyses will help you identify a vendor’s strengths and overall strategies to see if the vendor can or will continue to be able to meet your needs. It's also helpful when trying to understand your own organization's operating environment: the better you understand the way your company is moving, the better able you'll be to position the IT department in front as opposed to being dragged along behind. Being in front, on the leading edge of change, is more fun and will make the IT department much more valuable to the company.

An MBA can give you an opportunity to deepen your technical expertise.While working on my MBA, I had to write numerous papers, so I took each opportunity to explore the application of different technologies in business. One time, I wrote a paper on ERP that distilled best practices for implementing the system successfully. This paper helped me get my current job because Christopher Newport University was in the process of implementing an ERP system and needed someone with deep ERP expertise. Both Christopher Newport University and the College of William and Mary have used my paper as an introduction to ERP

implementations for staff working on the project.I wrote other papers on enterprise reporting architectures, on Java’s position in the software development space and on the development of activity drivers in IT for activity-based costing. The process of writing each paper gave me greater insight into each topic.

You can apply business school classwork to your day job.In one class I wrote a paper that investigated the value of training for the IT staff, and I used the research and arguments I developed in that assignment to convince management to approve a substantial training budget for my staff at William and Mary.

On another occasion, I developed a statistical analysis that identified giving patterns across different segments of William and Mary's alumni. In this analysis, I compared different categories of graduates and the frequency and amount they donated to the college. My analysis revealed that alumni who received their undergraduate degrees in business gave with the greatest frequency and donated nearly twice the average amount of other segments of the giving population. This particular group of alums had been managed by a centralized annual fund group for many years, but after I presented my findings, the business school lobbied for and received approval to appeal to those generous donors directly. The result was more fund-raising dollars for the business school and for the college overall. I would not have thought to explore this business issue of fund-raising had I not gone through the MBA process, and William and Mary might not have brought in more donations had I not uncovered these funding patterns.

You'll polish your written communication skills.Because the MBA is a master's-level academic program, you generally have to

produce a 20 to 30 page report for each class subject. In my program, the classes were only six weeks long, so every six weeks I had to demonstrate academic mastery of a given topic with each paper I wrote. The ability to research business topics and develop written comprehensive analyses quickly has been enormously helpful to me in my role.

You'll learn standard tools for organizing business activity and managing business processes.Before working on my MBA, I looked at IT as a services organization that executed requests or commands rather than as a function that needs to position itself strategically inside an organization. The MBA gave me the tools, techniques and resources I needed to run IT like a business — things like risk management plans, performance plans, project management methodologies, steering committees, process maps and marketing plans. Since I obtained my MBA, I manage the IT function in a far more disciplined and strategic manner. I understand that my responsibility is to make IT a strategic asset to the business, and I’ve seen that once you start putting those tools and techniques into practice, the business starts to recognize IT as a strategic asset. It’s like a job promotion: You don’t get recognized for the work you’re going to do — you get recognized for the work you’ve already done.

All of these benefits can be attained through other means, other training or other experiences. While the MBA is expensive, requires a big emotional investment and can distract you from your day-to-day work, only the MBA can provide all of the above benefits in a relatively short time frame, in a comprehensive framework and with a lasting credential. I strongly recommend it to all aspiring CIOs. CIO




80%of Indian CIOssay that long-term strategic thinking

and planning is critical to be CIO

Source: CIO India Research


Trendline_Nov11.indd 19 11/16/2011 11:56:19 AM

The Toronto Transit Commission moves 465 million people every year, and is leaning on technology to do that. That’s giving CIO John Cannon and the IT department the opportunity to tackle a variety of dynamic new projects. By DaviD Carey

Technology on The Move

case File

Reader ROI:

The importance of managing customer expectations

IT’s role in enhancing user experience


The ToronTo TransiT coMMission promotes its services to commuters as ‘The Better Way’, and with the help of CIO John Cannon and the IT department, it’s making good on that promise.

A 33-year veteran of the TTC, Cannon worked in many areas of the organization before joining the IT department in 2001, just after the transit service had gone through its Y2K preparations. The TTC is the third largest public transit system in North America servicing some 4.5 million people in the Greater Toronto Area, with a network of subways, streetcars and buses. During Y2K, the organization wasn’t able to replace a lot of its systems outright, so most of the activities that Cannon was involved in early on with the department had to do with keeping those systems going and upgrading or replacing them.

But more recently, as the TTC seeks to improve its service, he and the IT department have become involved in a number of important new initiatives. “In 2007, we were approached by TTC Chair Adam Giambrone and asked to review a lot of customer information applications that could improve the way we disseminate

Case Study.indd 38 5/12/2009 6:37:54 PM

Technology on The Move

information to the public,” said Cannon. “Traditionally we’ve been more involved with the ‘behind the scenes’ business-support applications. This has now brought IT into the forefront.” One of the key new services IT has helped deliver is a next-vehicle-arrival notification system, which uses Global Positioning System software to track vehicles and LCD screens in subway stations and select TTC stops to display arrival information.

“We were asked to provide a system that would tell customers when the next train would arrive within the subway and when the next bus or streetcar would arrive on surface routes, enabling them to plan their trip accordingly,” said Cannon.

“If they’ve just arrived at a spot they can tell from the signs, or eventually from their cell phone, that the vehicle is ten minutes away, giving them the opportunity, for example, to get a coffee before they come back to the bus stop. We think that’s going to be very effective.”

The pilot project for the notification system was launched in December, with display screens being installed at a few streetcar stops.

Additional screens are now being installed at other subway stations and select on-street stops. Soon all streetcars will be retrofitted with GPS equipment. By the end of 2009, all subway stations will have next-train-arrival screens.

Work enabling customers to use SMS to obtain next-vehicle-arrival information on all TTC surface routes was also started in 2008. The final project roll-out will include a unique identifier for each vehicle stop to allow customers to obtain specific stop information via wireless technologies (i.e. Internet and/or SMS).

The IT department has also been involved in developing the new e-Alert subscription service, which issues e-mail notices to the public when there is a major delay occurring in the subway system.

Notification is sent out if the subway is delayed and shuttle bus service is in operation, which generally includes delays of more than 15 minutes.

Emergency Exit The public’s appetite for such a service was confirmed immediately upon the recent rollout of e-Alert. “As soon as we released it, we ended up with over 8,000 people signing up the first day,” said Cannon. “We’ll be expanding it to include surface interruptions to our service when they occur, and this will enable customers to plan an alternative route if they see there’s going to be a delay to their transit trip.”

Another project planned for later this year is an e-commerce application enabling customers to purchase their passes, as well as any other fare media online. But according to Cannon, the biggest application that the IT department is now working on is the Internet Trip Planner, giving TTC users a self-serve means of planning their transit trips using routing information, timing points and walking distances.

“A lot of people have been anxious for that one,” he said. “They will be able to put in their starting point and their destination, and the application will enable them to plot their trip. It will tell them what bus, streetcar and subway they need to take, where they need to make a transfer, and what the cost of the fares are going to be as they get on or off the vehicles.”


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Case Study.indd 39 5/12/2009 6:37:55 PM

it was being done. “In 2002 we started down the path of bringing about the management changes that would impact the fundamental direction of the department, and we were seeing progress in this,” said Cannon. “Then we invited the NQI group in, and through their audits they confirmed that, indeed, we were making positive changes.”

The IT department thrived on the oversight, achieving a bronze, a silver, and a gold level over its seven years of involvement with the program. Recently, it was recognized with the Canadian Award of Excellence from the NQI group. Soon after receiving the Award of Excellence, Cannon was surprised to receive a personal letter from the Prime Minister, recognizing the efforts made by the department and citing them as something that should be strived for by the rest of the IT industry across Canada.

Cannon attributes the department’s success with the quality program to having what he calls “the whole package. Any one element can make a program work well but in our case we have many,” he said. “Senior management at the TTC are fully supportive and encouraging; they’re totally in line with what we’re doing and they provide the budgets and resources needed for us to accomplish what we’re looking to do.”

Another part of the package is the IT organization itself, which now numbers about 170 employees and includes five direct reports: application services, technical services, client services, project management, and quality assurance. “We’ve got a great team of directors, as well as the people in the department themselves,” said Cannon. “I said to them, ‘we’ve got these challenges and we have to step up to the plate. Can you do it?’ And they all came through.”

Revitalizing the SubwayLooking ahead, Cannon notes that the TTC is actively looking at bringing in automatic train operation for the subway system. This will enable it to operate trains more closely together, thereby increasing the ability of the system

case File

SNAPSHOT Toronto Transit CommissionSERvICES: Subways, streetcars, buses, etcetera

PASSENgERS: 465 million people every year

EmPLOyEES: <11,000

KILOmETRES OPERATED: 204,529

CIO: John Cannon

managing ExpectationsAccording to Cannon, one of the biggest challenges in heading IT at the TTC has been managing expectations, both internally and externally. “When our e-committee broached the idea of these applications [next vehicle arrival notification; e-Alerts; Internet Trip Planner] we all thought that this was exciting, new and interesting for the TTC. But then I saw this glint in their eye and I said, ‘Do you want all these at the same time?’, and the answer was ‘Yes’. So that presented quite a challenge in figuring out an achievable game plan to get all of those initiatives up and running simultaneously.”

One of the keys to success in the rollouts has come from a measured approach: doing things in ‘bite-sized pieces’, rolling them out, getting feedback from the public as new things are piloted, and using that feedback to fine-tune the application. In part, the process relies on the public’s indulgence, and Cannon admits that managing the expectations of the public is one of the biggest challenges currently facing the IT department.

Introducing Quality AuditsThe success that the TTC has experienced so far in rolling out the new applications can be attributed in part to the quality initiatives undertaken by IT over the past several years.

“When I first arrived in the department they’d just come off of the Y2K experience and there were a lot of mixed messages and different directions, as well as several vacancies in the department, so I wanted to settle everything down and stabilize things,” said Cannon. “I started a program of getting everybody focused on the key things we needed to achieve within IT from an overall management perspective.”

Cannon heard about a program being offered by the National Quality Institute of Canada that fit very well with his plans. The program would look at the overall management focus that he was trying to implement and allow a third-party objective review and evaluation of how

one oF The keys To success in The rollouTs has coMe FroM a Measured approach: doing things in ‘bite-sized pieces’, rolling them out, getting feedback from the public as new things are piloted, and using that feedback to fine-tune the application.


to move more passengers with the existing fleet. “First, we had to put in a new signaling system which gives us more updated accuracy,” said Cannon. “We’ll now be looking at putting in a system that will allow the trains to operate more closely to each other.” The biggest challenge here is around safety, and so the Commission will focus heavily on building a number of checks and balances into the system.

Cannon also noted that the TTC is planning to introduce a new fleet of subway cars that will really make the public sit up and take notice. Rather than the current configuration of individual cars, the new fleet will be composed of vehicles based on a continuous open concept. “Commuters will be able to walk from one end of the train to the other; it’s totally open. And these trains will have both front- and rear-end operation,” said Cannon, “This is going to enable us to carry significantly more passengers. When you couple the new vehicles and the automatic train operation, we’re looking at significant improvements in the overall operation of the subway system.” The TTC is now in the process of finalizing the signaling system and making sure that it will work as expected. The new trains will start to arrive in 2010.

more Opportunities for ITAccording to Cannon, the IT department has plenty of other opportunities to enhance TTC operations, both internally and externally.

Chair Adam Giambrone has asked the department to look at other ways of using technology to improve

case File

customer communications, and there will be a number of initiatives along these lines, including the use of Web 2.0 applications.

“As well, there are some things we can look at doing better internally,” said Cannon. “A lot of the new subway cars, streetcars and buses are coming equipped with computers and/or IT applications for monitoring the maintenance and the actions of the vehicles. And so there’s now a requirement for us to get involved up front as the vehicles come online in order to make sure that we’ve got the infrastructure to support the information exchange with the new equipment. That is something new for the organization.”

He added that the IT department is also looking for other ways in which to bring technology benefits to the forefront of the business.

In his efforts to find a “better way” of using IT to support the business, Cannon decided to get more involved with his IT management peers, joining the CIO Association of Canada two years ago. “I found that many of the problems I was dealing with at the TTC were universal. All of the CIOs I came in contact with had the same kind of issues to a greater or lesser degree,” he said. “We’ve overcome a lot of the issues that some people are currently struggling with, and I’m happy to be able to share some of the things we’ve done within the TTC to help others resolve their issues.” CIO


An Internet Trip Planner will soon enable users with a self-serve means of planning trips using routing information, timing points and walking distances.


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Using GPS to track vehicles, TTC displays when the next train is arriving on LCD screens. Soon the service will be available on mobiles too.

The e-Alert subscription service issues e-mail notices to the public when there is a major delay in the subway system. When the service was released, over 8,000 people signed up on the first day.

With an aim to carry 175 million riders by 2021, the toronto toronto t transit Commission transit Commission tis using technology to make its passengers’ ride smoother.

HAvE A HAPPy JOuRNEy

When companies cut back, the heavy lifting for IT begins. By Kim S. NaSh


Feature -01 - Complexity Reduction.indd 42 5/12/2009 6:39:19 PM

ike a tank, the recession continues to roll right over companies. Take Fleetwood Enterprises. Vacation trailers and modular houses don't sell when people are out of work and struggling with upside-down mortgages. Even if someone wants to buy,

banks have clamped down on credit, making loans scarce. Fleetwood's sales have plummeted 32 percent from a high of $2.4 billion (about Rs 12,000 crore) in 2006, and the company has lost $119 (about Rs 600 crore) along the way.

So last summer, like many manufacturers, Fleetwood scaled back factory production. That wasn't enough, so Fleetwood is now going after big cuts. Before filing for Chapter 11 bankruptcy protection in February, the company had plans to close nine of its 27 factories in the US and Mexico and lay off 760 of its 5,700 employees.

Across the nation, grim-faced executives are breaking similar news. Offices are being consolidated, plants shut, employees let go. Such maneuvers, of course, are intended to save money; Fleetwood expects to save $40 million (about Rs 200 crore) per year. But achieving lasting results can take months of work performed largely by the IT staff — a behind-the-scenes scramble that is often underestimated by others inside and outside the company. It's not as if the press release and pink slips go out and savings pour in.

There are the obvious chores, such as blocking outgoing employees from corporate networks and redeploying computers. Often, when a facility is closing, IT has to set up new equipment at the remaining offices, such as a bigger data network to handle an increased volume of transactions that a now-closed location used to process, notes Steve Phillips, CIO of Avnet, an electronics distributor fighting to make $150 million (about Rs 750 crore) in cuts.

But IT executives who made it through the last recession in the early 2000’s say the current one's a doozy that brings new challenges.

Now smartphones and thumb drives are everywhere — hard to track and easily loaded with sensitive corporate data, says Mike Jackson, CIO at Rockwell Automation, which laid off 600 of its 21,600 employees in September and is cutting costs by $240 million (about Rs 1,200 crore). And started another round of cuts worth between $50 million to $100 million (between Rs (about Rs 250 and Rs 500 crore) in October.

Corporate Downsizing


The Sarbanes-Oxley Act (Sox), which didn't exist earlier, provides another new source of pain. At Fleetwood, for example, with other departments focused on consolidating workloads among remaining employees, IT must watch that new job descriptions and business processes don't violate Sox rules on segregation of duties, says Larry Smith, Fleetwood's vice president of IT. Yet Smith finds invigorating the challenges in downsizing projects where so much money is on the line. "This is where you prove you can really manage," he says.

Prove it, you must. The technology group must not become an obstacle to making real the millions in savings promised when companies close offices and lay off employees, says Anna Frazzetto, vice president of technology solutions at professional services firm Harvey Nash. "If CIOs don't step up, credibility diminishes," she says.

Smith and fellow IT leaders in hard-hit industries have a warning for their peers: Convey the scope of IT work involved in downsizing. More than ever, senior management is asking fewer people to do more. That includes the IT group, where budgets have been frozen or cut and layoffs have reduced the number of hands available for what Smith calls a "tidal wave of activity" unleashed by a companywide cost-cutting drive.

"You might have plant managers who make the hard decision and then are done with it emotionally and want to move on," he says. "The last thing I want to hear is 'We're done,' because we're not even started yet."

Pick Up PCs and Pull WiresAlthough smart executives know that closing an office or factory isn't as simple as it sounds, only those who have done it know the complexity and nuance. CIOs should educate their CEOs and peers about what it's like on the ground.

With $3 billion (about Rs 15,000 crore) in revenue, Arch Coal is one of the biggest coal mining companies in the United States, supplying the electricity industry with fuel to power the country. To concentrate on the most productive facilities,

Arch is selling the rights to some mines or divesting them outright.

In mid-2007, for example, Arch sold a mine to Alpha Natural Resources for $40 million (about Rs 200 crore). CIO Michael Abbene, sent someone from the desktop group along with three individuals from their local support contractor to the mine from Arch headquarters in St. Louis to disconnect Arch's server and 50

Reader ROI:

The IT implications of downsizing

Why the challenges should not be underestimated

How to ensure you don't miss anything


PCs from the corporate network. Of those machines, 19 moved with Arch employees to another site. The remaining 31 were handed over to the buyer as part of the deal.

First, all data on those 31 machines was moved to network shared drives prior to deletion and then backed up on a USB drive. With guidance from Arch's lawyers, certain geologic information was copied to another portable USB drive and given to Alpha. The team reset the administrator password on all PCs that stayed behind. Alpha had two or three people onsite at various times during the weekend to help. Arch also sent a person to the mine to review and pack up paper documents that were to remain with the company. While that handoff took two months, it can take longer. A 2005 deal to sell several subsidiaries that operated four mining complexes took seven months because the buyer had little technology of its own at the start. Arch agreed to provide IT

the infrastructure. Dismantling systems entails more than flipping switches. In February, two of Smith's IT staff spent a week at the Georgia plants hoisting 100 computers into crates and boxes, ripping out wiring and crawling through ceilings and closets to gather up several routers and other pieces of networking equipment.

Smith tries to keep the dismantle team small, so as not to disrupt regular IT work at headquarters. If it's a big job that must be done unusually fast, he will sometimes hire a firm to help, especially when taking apart cabling, which is complicated and time consuming, he says. "There's a lot of just plain old physical work."

Before PCs and laptops are packed up, they are evaluated for reuse or recycling. If the machine has a new enough processor and can accommodate at least 2GB of RAM, Fleetwood will upgrade it — re-imaging the machines with licensed software and redeploying them to employees in other facilities who had been using older systems. Shuttering a plant completely takes from 30 to 120 days, Smith says.

Sometimes, though, a closure isn't a closure. For example, a Fleetwood factory in Waco, Texas, has stopped making manufactured housing, but several service and sales personnel remain at the facility. Or a shutdown of a large plant may occur in waves, first cutting production to 50 percent, then 10 percent or less to use up remaining raw materials. Meanwhile, Smith's IT group has to know who's going away when, shut off access and maintain other systems. IT also has to figure out whether any networking equipment can be removed as excess and look at the network blueprint to see if firewalls need to be reconfigured now that fewer people are on the systems.

In other locations, assembly lines are stopped and those blue-collar workers let go. But administrative people have kept their jobs and been moved to another office. In that case, the data network servicing the remaining office may need a larger-capacity circuit to handle additional transactions generated by the people who transferred in.

"It may sound simple, but one major thing we struggle with, to get accurate information about, is what they are doing with a plant," Smith explains. "Skeleton crew? Close? Sell? If selling, what will be bought? Is there a service group or sales group still officing there?" He says he always has to ask several times, in different ways, "Define what you mean by 'close.'" Good information comes from good relationships. IT and project managers should talk to as many manufacturing colleagues as they can at least a few times per week to stay in sync with actual versus planned schedules, he says.

Let Employees Go — Not Your DataTechnology now touches so many more areas than it did at the start of the decade that untangling and accounting for it all during downsizing — if not done methodically — overwhelms IT, says Jackson, Rockwell's CIO.


services, such as site-to-site VPN capability, while the buyer set up its own systems, Abbene says. "They created a whole infrastructure that almost mirrored what we had."

When selling a facility, Abbene advises, the CIOs from each company should meet to go over the IT implications of the deal — from equipment and data disposition to deadlines — before anyone touches any systems. CIOs should then designate a project manager to orchestrate the work.

When Arch closes a mine, it generally puts together a team that may include local mine management, IT, human resources, accounting, legal, payroll land management, marketing and sales, operations or purchasing.

"Every situation is different. You must understand what the acquiring company wants to do," Abbene says. In a true closing of an office or factory, such as Fleetwood's factories in Willacoochee, Georgia, IT has to disassemble


Larry Smith, VP of IT with Fleetwood Enterprises,

watches carefully for Sarbanes-Oxley violations when staff members take

on the work of laid-off colleagues.


When making cuts, the most delicate work involves disconnecting laid-off co-workers. Their access to the company network as well as local applications must be blocked and their computing equipment collected, cleansed and redeployed. Not only are emotions high but so are legal implications. Unlike during the dotcom bust, smartphones and thumb drives are more prevalent. You can fit 32GB of data on a BlackBerry memory card. The devices can also be slipped easily into a pocket alongside one's personal items as a desk is packed up, putting proprietary information at risk. Get the mechanics of data and device reclamation wrong, and you open the company to legal problems.

Stephen Fox, an attorney at Fish & Richardson who specializes in labor and employment law, recently sued an executive who left his client's company for a similar position at a competitor. The client argued that this executive couldn't do his new job without using trade-secret information belonging to Fox's client. Although the executive wasn't laid off, what happened when HR and IT processed his departure serves as a warning to other companies, Fox says.

When the executive left, IT blocked his access to the corporate network but forgot to stop the e-mail program from forwarding his messages to his BlackBerry, which was his own personal device. He opened several of those e-mails, Fox says. Cutting off all access to company data must be swift and thorough, he says. Leaving accounts open or missing a step "makes you vulnerable if you ever have to prove in court that you truly do keep secrets that should be kept secret."

Rockwell has a strict policy about cell phones, says Jackson. He issues only BlackBerrys owned by the company and closely tracks who has one, he says. No corporate data is allowed on personal phones. As for portable drives, IT and the legal department do their best to educate employees on what's permissible to download, he says, but still, "it's virtually impossible to assure you have all that information." To address the roving thumb drive problem, HR stipulates in writing to departing employees that no corporate data may be removed from the company.

When Rockwell laid off about 600 people last fall, IT set up a command center to make sure nothing fell through the cracks. Human resources coordinated with IT to disable an outgoing employee's network access within moments of a manager delivering the bad news, Jackson says.

For each employee being let go, IT collated reports from its three asset management systems to be sure all company-owned cell phones, laptops and other devices were returned.

They got all the gear but it would have been smoother, he says, if the company had been using just one asset management package; it's consolidating now. Asset management systems are key to ensuring IT collects everything it should, says Frazzetto of Harvey Nash. The equipment is worth something and the material on it could be worth much more, she says.

Every CIO has his own favorite tip about protecting information during a layoff. At Arch Coal, the accounts of

outgoing employees in critical positions aren't immediately deleted. Instead, as a manager talks to the person being laid off, IT, in its corner of the building, will change the person's system password. That way, e-mail doesn't bounce back to senders and the manager can later assign follow-up to colleagues as needed, Abbene says. An escort, who is usually the person's manager or someone from HR, will oversee the packing up of individuals deemed in "sensitive" positions, to help ensure they don't leave with portable drives, he adds. On Abbene's staff, one person in particular works with human resources on employee terminations. "Most of the time, she gets the word from HR before I do," he says. Discretion is critical, adds Phillips, Avnet's CIO. IT can do the work of cutting user access privileges invisibly to the rest of the workforce. In person, he urges his team, "Be honest and respectful to the employee. It helps them get on with their future."

Deadlines for this kind of work are aggressive to minimize disruptions, Jackson adds. "From a business point of view and a humane point of view, it's best to do it quickly."

Before companies make any cuts during a downturn, using IT to help strategize which reductions will be effective is one way CIos can prove their worth.

"Make a direct effort to drive your company out of the recession," says Anna Frazzetto, vice president of technology solutions at professional services firm Harvey Nash. "It can really turn around the perception of a CIo within an organization."

Good business intelligence systems can determine the impact of varied scenarios, says Steve Phillips, CIo at Avnet, a global technology distributor.

In the past year, Avnet has watched sales and profits waver each quarter as the market for enterprise IT equipment and electronic components got jumpy. When the mandate came down to lop off $150 million (about Rs 750 crore) from the business, one area the company wanted to explore for potential cuts was automobile expenses, including mileage reimbursements for its road-warrior sales team.

Using SAP's Business Warehouse and Business objects tools, human resources and accounting worked with IT to create reports that helped them understand travel expenses by employee, geographic region, month and type of expenditure. Analyzing this information led to adjustments in Avnet policies that so far have saved 30 percent from mileage and other auto reimbursements, Phillips says.

For example, car allowance levels are now based on usage and job categories, he explains. The company got "an appreciation for how our business intelligence systems can be used to help create actionable plans with bottom-line savings."

— K.S.N

Good data from business intelligence systems is essential to deciding where to make reductions.

Make a DifferenceBefore the Cuts Come




No one has it tougher right now than the IT group at Fleetwood. They're doing it all: closing factories, consolidating offices, moving employees to new locations and laying off hundreds of blue- and white-collar workers in two countries.

Let Nothing Fall Through the CracksTo manage, the group treats each event as a separate project, opening service requests in Oracle's Siebel customer relationship management software. Each event template has six categories that Smith considers crucial: overall time line, network hardware, PC hardware, applications, security and Sox analysis. He gives business-unit managers weekly reports for each project, including percentage of the work competed in every category.

Sox concerns Smith because, he notes, no one had to worry about complying with it during the last recession. Sox regulations emerged, in part, to guard against financial fraud that compounded the 2002 downturn. This time around, as companies rush to respond to the dire economy, sometimes compliance isn't top of mind. Staffs are cut and survivors are handed more tasks to do, at times dangerously so. For example, an accounts payable clerk may take over the job of setting up vendor accounts, which used to be done by a colleague. But one person doing both jobs violates rules on segregation of duties, which say that no individual should control a business process end to end.

At Fleetwood, the IT group watches for those risks because other managers may be more focused on consolidating. "I tell all my people, from programmers to business analysts, to watch out for issues with controls. You see something, raise your hands," Smith says.

Once personnel are shifted around and their jobs are defined, he or another IT staffer will talk through the processes and systems involved to see if red flags fly. When they do, the problem can sometimes be fixed with a technology tweak — perhaps changing the order in which transactions run. When that doesn't work, IT will bring it to the business unit to work out a change of process, he says.

Smith has looked for software to model segregation of duties but hasn't found anything he likes. He advises other CIOs to stay on top of Sox all the way through a staff re-organization of any type, but especially during a cutback, when change can be chaotic. "There's only so much shrinking you can do without running into trouble."

Jackson's group at Rockwell tracks its consolidation work with Microsoft Project and Excel, noting who completed each step when: collecting hardware, removing software, wiping drives, redeploying, selling or recycling the machine. "The people on something like this tend to be same people we put on M&As. They just do it in reverse," he says.

Look Ahead to Better TimesWhen downsizing goes according to plan, savings materialize. After Avnet's fall layoff, several extra computers and laptops with life left in them were available, Phillips says. "Our PC spend in the first quarter was dramatically lower than it would have been."

Fleetwood normally spends about $1 million (about Rs 5 crore) per year refreshing PCs. But because plant closures and layoffs have freed up machines, the company has spent "a fraction" of that in the last three years, Smith says.

Further, Smith expects to convert a key manufacturing system from a legacy VMS software platform to Oracle's JDEdwards and Siebel. To date, Fleetwood has either met or beat its schedule. "It's a terrible thing to say, but the best time for a major conversion is a downturn, when everything's quiet," he says. "It costs less, there are fewer plants to convert."

Still, even if IT's downsizing work is airtight and the projected savings materialize, it may not be enough. Some economists don't expect significant recovery this year, despite the combination of tax cuts, job creation and other stimulus measures.

Time will tell for Fleetwood. Its shares were delisted from the New York Stock Exchange in January, after the company's market capitalization sank below NYSE's minimum of $25 million (about Rs 125 crore) for more than 30 days straight. Fleetwood stock now trades over the counter, in pennies.

Smith, however, remains optimistic. "I've been working in manufacturing companies my whole career, 35 years. I've been through a couple of ugly downturns before. You have to stay positive and focused," he says. "This is where you figure out whether you can really manage or not. There's tons to learn if you don't get sucked into the black hole." CIO


When Arch Coal sells a mine, CIO

Michael Abbene’s team reviews the deal

before anyone touches any IT equipment.



From Fairbanks to Phoenix, employees in the branch offices of North Coast Electric Co. are likely singing Rick Bumpus' praises these days, and with good reason. Bumpus, executive vice president and chief operating officer at the electrical equipment distributor, has found a way to save remote employees from the tedium of having to

manually print and send out hundreds of invoices every day. And he's saving his company money to boot.

During the process of moving to a new ERP system called Eclipse a couple of years ago, Bumpus learned about a third-party firm that provides electronic document delivery, a feature Eclipse didn't have. Bumpus liked the fact that Billtrust offered a hosted service that would take the hassle out of the invoicing process for North Coast Electric's 34 service centers.

Bumpus had originally intended to wait until Eclipse was in place for a while before implementing another software package, but he changed his mind when he heard what Billtrust could do.

PaPerTakesFlight

smart Wins:

With e-document delivery, electronic invoicing can be a no-brainer. By EsthEr shEin

e-invoicing

Reader ROI:

The ROI of e-document delivery

Why it’s easy to implement

How it can help with CSR

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"The case for changing our billing process was so compelling ... we went live with Billtrust at same time we started with Eclipse,'' says Bumpus, who is based in Seattle. "Now, instead of people having to set up manual processes and dealing with paper, we send an electronic file to Billtrust every night via FTP, and then they process it according to the business rules we pre-defined, and [the invoices] are mailed off."

When customers select the e-mail option, they receive one e-mail anytime they have a bill. A PDF is attached; each invoice is a separate page of that PDF. If customers choose to print out the document, each invoice appears on a separate page.

If customers choose the ‘Invoice Gateway’ option, they can view their invoices on the Web site. They can then choose to pay their bills online and leave them in online storage with no paper, or they can print out their bills. For some services — including contractor-estimating packages or QuickBooks — customers can directly import an invoice into their software, bypassing printing entirely.

how it works

Electronic document delivery automates the sending of high-volume documents

such as invoices, financial statements, letters and reports by taking a business application file that has been tagged with individual e-mail addresses and securely ‘blasting’ it to multiple recipients at the same time.

Both the hosted model and on-premises e-delivery software packages are experiencing big growth, notably in small-to-midsize firms, says Jennifer Roth, an e-payments analyst at TowerGroup. Industry observers say that e-document delivery streamlines the billing process, reduces time-consuming manual tasks and saves companies significant amounts on paper and postal costs.

"Businesses are looking at ways to take paper out of the process and put things online while complying with regulatory requirements, depending on the industry,'' says Roth, who sees the use of electronic document delivery particularly strong in the insurance and utility industries.

The time is ripe for e-documents, Roth continues, given the increased emphasis on companies going green. "Businesses are trying to do their part, so it's another reason why you may not have seen this couple of years ago; this is part of our own social responsibility."

Also propelling growth is that e-document suppliers are making it easier, says Sush Koka, a research director at consulting firm PayStream Advisors. These days, many e-document vendors are delivering value-added services around supplier recruitment, says Koka. For example, suppliers like Xign, acquired by J.P. Morgan Chase & Co., can go through a company's lists of suppliers and buyers and identify which are good e-document candidates. Then the suppliers contact these other firms on the company's behalf to educate them on the benefits and enroll them for e-document delivery, Koka says.

Implementing or increasing electronic invoicing was identified as the highest priority for 2009 for 48 percent of more than 300 financial professionals, according to PayStream Advisors' Imaging & Workflow Automation Adoption Survey, conducted during the last two quarters of 2008. Not surprisingly, more than half of those respondents reported that they presently receive over 80 percent of their invoices in paper format.

From an earlier PayStream report: "Our research shows that by 2010, the number of B2B invoices delivered within the US in

e-invoicing

electronic format will exceed the number of paper invoices."

a one-man show

While electronic invoicing is among the more popular applications for

electronic delivery, many products and services also provide the ability to blast out financial statements, reports and payment histories as well.

That's what Brad Barron had in mind when he was looking for some other way to deliver internal financial reports. Barron, pharmacy systems coordinator at Bashas' United Drugs, a 75-year-old regional supermarket/pharmacy chain based in Chandler, Arizona, is responsible for all corporate reporting for the company's 64 pharmacies.

"I'm kind of a one-man show ... and as we grew, that task became more and more cumbersome,'' notes Barron, who administers the system used to produce and bill for prescriptions. Barron was spending hours producing reports and then faxing them or attaching PDFs to e-mails and sending them out twice a week.

"I got to the point where I was sending out 600 reports a week manually that way, and it was taking me literally four to five hours a week just in the delivery process," he says.

Barron does all his financial reporting in a data warehouse and then moves the information into Microsoft Access. The information includes business analysis, the number of prescriptions being filled and their retail value. Some stores receive as many as 10 different reports of between one and four pages each twice a week, he says.

"My main interest wasn't from a corporate standpoint, as far as ROI; it was my time,'' Barron explains.

About a year ago, while doing an Internet search, Barron came across PDF-eXplode, software that takes a master PDF file and

E-invoicing enables companies to reduce days sales outstanding — which measures the number of days a company takes to collect revenue after a sale — and allows them to turn sales into cash Faster.

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splits it into individual attachments based on hidden tags in the original document. The software then distributes each PDF either via e-mail or fax to the recipients, while preserving the original appearance of the documents.

After conducting a trial, Barron purchased PDF-eXplode from United Data Strategies for $395 (about Rs 20,000); the process of configuring it for the Access database took about 30 days, he says.

Barron now saves between four and five hours a week just on the report-delivery process and says that translates into a savings of two weeks of his time per year. And "when I was electronically faxing these reports ... I know it was huge expenditure of paper," he adds.

He says it was very easy to set up the electronic tags in a report database and then generate the reports by using the print function. "I just go in and click 'Print,' and the PDF acts just like a printer in Windows. It dumps the reports into a print spool, and I set up e-mail addresses where the reports have to go and it sends them."

Barron generates a report with each store's individual sales figures, and the software sends information to the appropriate store based on the e-mail addresses he inputs. "It takes one 64-page PDF file and knows which store to send which report to, all done automatically; all I have to do is print one report,'' he says.

Barron calls the software "phenomenal, exactly what I was looking for. I'm constantly using it as I expand my range of reporting. ... It saves me a lot of time and hassles."

non-virtual BeneFits

Feroz Merchhiya experienced a similar situation to North Coast Electric's,

since his Great Plains ERP system (now also called Microsoft Dynamics GP) couldn't send out financial statements electronically. Merchhiya, senior program manager at Intuit-owned Digital Insight, which provides online banking and related products for banks, says his company's customers want invoices sent in a variety of ways, and whenever Digital Insight needed to generate one, it was a cumbersome process.

An earlier electronic-delivery product Digital Insight tried had issues with scalability, maintenance, support and, ultimately, performance. So the finance group abandoned it and went back to its manual methods, Merchhiya says.

Eventually, Merchhiya came across PDFBlaster, from Data Fabrication, and liked its simplicity, ease of implementation and, above all, the vendor's willingness to support the product. After an extensive test cycle, Digital Insight implemented the product about a year ago.

While Merchhiya won't disclose what he paid for PDFBlaster, he says "it has basically met our expectation in terms of ROI," and Digital Insight has saved $484,000 (about Rs 2.4 crore) in the first year. In first month alone, he says, the company saw an immediate savings of $40,000 (about Rs 20 lakh).

Digital Insight has also reduced days sales outstanding (DSO) by 10 days in terms of producing and mailing invoices. DSO measures the average number of days a company takes to collect revenue after a sale has been made. This is relevant because the faster a company can turn sales into cash, the sooner it can reinvest the cash and make more sales.

"When you are looking at reducing the time between when you invoice your customer and when you receive the payment, the sooner it hits your books the better,'' says Merchhiya. He says his company sends out 2,000 or more invoices monthly, and in the first phase it has already reduced the amount of paper generated by 40 percent, which meets Intuit's "very aggressive corporate social responsibility goals." Digital Insight has also saved 24 hours of labor per month by eliminating the manual efforts involved in generating and transmitting the invoices.

"You choose a print function that goes into the PDFBlaster queue, and you set your delivery method preference,'' such as

e-invoicing

fax or e-mail, Merchhiya says. Users can also schedule the date and time the invoice goes out.

Bumpus at North Coast Electric also found that the payment process has enabled the company to get invoices into customers' hands a day earlier than if the invoices had been directly mailed from individual service centers. He says Billtrust attributes that result to its targeted bundling with

other companies' mail to stream their invoices through the post office more quickly, in the case of customers that have requested paper invoices.

However, Bumpus says the fact that invoices arrive sooner doesn't necessarily translate to his company getting paid quicker, especially since customers' payment terms haven't changed, but he says they like getting their

invoices earlier so they can bill their own customers sooner.

North Coast sends out some 300 to 400 invoices per day, and Billtrust charges it per invoice. Exact rates vary by volume and by the method the invoice is sent — electronic or traditional mail. In the latter case, Bumpus says, "they charge by the envelop. So if there is one invoice, it costs the same as if we had three invoices in the envelop." As a result, for those customers that still receive paper-based invoices, North Coast is saving about 75 percent in mailing charges. An electronic invoice costs "single-digit pennies" to send, Bumpus adds.

Because of the savings on so many levels, "I didn't do a detailed ROI. It was such a no-brainer for me; the most it's going to cost is the postage," Bumpus says, because Billtrust gives volume discounts based on its ability to sort the invoices among multiple clients.

Sending financial documents electronically "helps take friction out of the supply chain,'' Bumpus says. "That's really what we work on." cio

Esther Shein is a freelance writer and editor. Send

feedback on this feature to [email protected]

48%Of financial professionals say implementing or

increasing electronic invoicing was their

highest priority for 2009

Source: PayStream Advisors

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he current climate of company mergers and downsizing is putting CIOs under pressure to keep the lid on software costs which now account for nearly a third of the average IT budget. Add to the mix software suppliers who are more determined than ever to make sure their customers pay for all the programs they use and software asset management (SAM) seems a no-brainer.

SAM, the process of recording what software licenses an organization has bought and making sure they match up with the programs that staff actually use and the way they use them, not only heads off the unwelcome attention of software suppliers and their lawyers, but can also cut costs.

“If you are on top of your game you save money,” confirms Bobbie Ttooulis of services and software firm Computacenter. “If you have proper SAM in place you are going to have your computing under control and can be pretty confident you are sweating your software assets effectively.”

However, SAM is proving problematic for many companies. Some lack the will to invest in the process, while others are bogged down in

Many enterprises are so deeply buried under

a desert of licenses that only software asset

management (SAM) tools can help them. But

even those that aren’t can find SAM useful to

reduce costs. By John LamB


Business Strategy

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Business Strategy

turf battles over who should gather the data. Many are just struggling to understand how their licenses work.

A Labyrinth of Rules Finance departments are usually responsible for maintaining asset registers including software, while IT departments know how that software is deployed. “All too often the priority is tracking of physical assets and software is forgotten, so the information is not getting from IT to finance on how software gets used,” says Karen Conneely of asset management software company Real Asset Management.

Despite the availability of databases to record information about licenses and so-called discovery tools such as Centennial, Eracent and EasyVista, which dispatch agents to inspect systems and log the software they are using, many users still rely on spreadsheets to track their assets.

But experts agree the task has become just too complex to manage by Excel. And it is likely to become even more burdensome as users move to new computing models such as virtual systems which have the capability to create and destroy code within a matter of minutes, making logging its use very difficult.

The predicted boom in browser-based software as a service (SaaS) is likely to create further complications with cloud-based computing sitting alongside, or integrated with, software that companies already run on their own premises. In any case, SaaS subscription terms are likely to become as complex as software licenses.

Neither software companies nor their customers have agreed on the best way to reconcile this new kind of usage with old-style licensing. Constant metering of software is one activity that is likely to become much more widespread, according to some experts.

“Virtualization allows the malicious user to pirate software. When companies head down the virtualization path, tools built-in by vendors fail to function,” says Chris Holland, vice president of software rights management at security company SafeNet.

Even without new technical developments, current tools are struggling to keep up with the licensing landscape. For example, while discovery tools may be fine at logging software subject to a single user license, they may struggle to cope with concurrent licenses which allow only a proportion of potential users to access a program at any one time.

In addition, SAM software must cater to myriad different license terms, ranging from those related to named users to licenses that apply to each CPU. The recent development of servers with multiple cores has posed problems for software suppliers accustomed to charging customers a fee for each server an application is installed on. Software companies have still not settled on a good solution, analysts say.

The industry itself has been keen to maximize revenues from licenses. So-called true-ups — reports on the size of a user’s estate which are used to calculate license fees — can account for up to 15 percent of revenues, say industry insiders. “It’s easy pickings to go after your customers: all big suppliers have license-management practices,” says Patrick Gunn, a vice president of SAM supplier ManageSoft.

But suppliers are taking steps to make it easier for customers to manage their licenses and software companies have collaborated on creating a series of ISO standards governing several aspects of SAM.

The latest concerns tagging — the headers that identify a piece of software — and seeks to lay down a standard way of identifying software from different suppliers. In addition, the IT Infrastructure Library (ITIL), a widely-used methodology for managing IT, has been extended to include SAM. “The ISO 19770 standard is only just coming out, but we anticipate it will be widely used,” says Tony Baron, global vice president of IT services firm Dimension Data, and one of the authors of ITIL.

In addition, industry body the Business Software Alliance (BSA) has just launched a program designed to help businesses implement SAM programs. The BSA SAM Advantage aims to provide its members and their partners with a set of online SAM tools and training frameworks.

Pulling Heads…However, despite all this tough talking, software industry watchdog the Federation Against Software Theft (FAST) says

IT leaders “have got their heads in the sand” when it comes to adopting effective SAM policies.

Three-quarters of businesses in the UK for example polled in a survey commissioned by the Software Industry Research Board (SIRB), set up by FAST and its partner Investors in Software (IiS), say that they have a SAM policy. But, over a third of them were unable to


Reader ROI:

The problem with licenses

The importance of SAM tools

How much software asset management can reduce cost


place that begins with asking for the business case for acquiring a piece of software,” says Phil Heap of FAST Corporate Services, a subsidiary of FAST that is aimed at educating firms on SAM. “The next question is whether the organization already has the software that is needed and whether it is tested and approved. The final question is whether you have a license for it.”

The software industry, through FAST and the BSA, is pushing hard to raise awareness of the need for properly licensed software.

Persuading a cost-conscious board of directors who see SAM as merely an extra expense to take action is an essential first step to software compliance. Companies should be spending between three and five percent of the value of software they own on managing its use, according to analyst firm Gartner.

John Brown Group, a contract publisher that produces company magazines, is one software user that received a knock on the door from a supplier. About a year ago, Microsoft contacted IT director Richard Sacre about anomalies in the publisher’s account. “We knew we were a bit short but didn’t know by how much,” he recalls.

Sacre admits that if the £60 million (about Rs 450 crore) turnover company had tried to reconcile its software assets on its own, John Brown Group would probably have failed to meet the deadline set by Microsoft and would have ended up buying too many licenses in order to be certain it was compliant. In the event, Sacre hired an asset management consultancy called SAM Practice and avoided having to buy any more licenses.

“The volume of different software applications became difficult to manage,” Sacre observes. “We did our best but we were always exposed in a sense. We have grown by acquisition and the licensing situation in the companies we acquire is often in a bad state. We usually merge the businesses and then straighten out the licensing afterwards.”

Sacre says that software companies overcomplicate their licensing regimes, citing the more than 400 ways of licensing a Microsoft product. Hiring a consultancy helped John Brown Group understand how to interface with suppliers, according to Sacre, and shaved its software budget by 20 percent annually. “Manufacturers are quite scary, hence the panic buying and fear factor,” he maintains.

Striking Gold The Student Loans Company (SLC) has been bolstering its software asset management efforts over the past four years with impressive benefits. Back in 2004, the company installed Software Organiser, a license management database program, and a software audit tool called Centennial Discovery.

The organization, which manages loans and grants to students in higher education, also subscribed to FAST.

Business Strategy


convince interviewers that they have any more than a basic understanding of their software licenses.

Some 60 percent of the 600 or so companies that took part in the research, published in November, saw no risk from “the misuse of software or counterfeit supply”, says FAST, “and 43 percent do not believe they face a threat from the lack of compliance as they claim to have a SAM policy”.

FAST revealed that more than 300 of the companies that took part in the research had been subject to a software audit by suppliers within the previous year — evidence of the determination of software companies to crack down on breaches of their software licenses.

“The point to stress to business leaders is that they cannot afford to be complacent about the subject of compliance and risk to their businesses as they need to validate that they are able to demonstrate good governance and transparency

in terms of compliance,” says John Lovelock, chief executive of FAST IiS.

“The research points to critical weaknesses that leave their organizations with material risk — and put bluntly that means a risk to the bottom line.”

There are numerous pieces of legislation that affect the software that companies own with penalties of up to 10 years in jail for the most flagrant breaches of copyright.

In practice, the biggest risk that most users face is that they will be audited by a software supplier and charged for using software in a way that they were not entitled. Audits, which are part of the license agreements for all software, involve a visit from an auditor to inspect the records that a company holds about its software.

Preparing for audits and maintaining records over the long term is an administrative task that involves gathering evidence that licenses have been paid for and software has been installed. This may involve holding paper invoices and the original wrappings of software disks.

…Out of the SandBut these SAM processes also need to dovetail with the software lifecycle. “It is important to have a process in

aking a cost-conscious board of directors — who see SAM as an extra expense — believe in it is an essential first step to software compliance. Companies should be spending between three and five percent of the value of software they own on managing its use, says Gartner.


“FAST have been a tremendous help to us, advising and guiding us through the accreditation process,” says Theresa Kilpatrick, software licensing manager at SLC.

As a public body SLC has a statutory duty to comply with licensing terms. However, since investing in audit and compliance tools the organization made a saving of £85,000 (about Rs 63 lakh) during its first year of FAST accreditation and has since benefited to the tune of about £50,000 (about Rs 37 lakh) annually.

Asset management enabled SLC to cancel unused maintenance contracts and renegotiate the rest, as well as retire software that had been bought but not installed, and eliminate software programs with duplicated functions.

The company has linked license management with tougher controls on how employees access software so that unlicensed software does not get deployed. Internet downloads are limited and end-point security systems are in place. SLC has set up a software media library with strict procedures for booking software in and out.

“End-users don’t deliberately seek to cause a problem; mostly they make innocent mistakes,” believes Kilpatrick.

Kilpatrick says there is quite a lot of work involved in setting up a database of licenses, particularly since header information from each program varies. There are many ways of spelling software vendor names and versions for example. “Asset management is not a quick process, it takes time. You have to work closely with your teams,” she adds.

Although many organizations will attempt to use a spreadsheet to manage their software estate, Kilpatrick is adamant that an electronic audit tool is an essential piece of software. “The SLC’s infrastructure changes every 15 to 20 minutes,” she points out. “So you really do need one.” CIO


Business Strategy

Shelfware can accumulate as a result of canceled or scaled-back projects, corporate downsizings, decentralized It purchases, or a failure to buy the right technology to begin

with. Here’s how to keep that pile from growing:Purchase Just in Time. buying software only when you're

ready to use it sounds simple enough except that vendors offer hefty volume discounts inducing companies to buy ahead. not smart, say experts. "the more you buy, the better the deal you get upfront, but the more maintenance you pay down the road," says Gartner analyst Scott nelson. He notes that vendors usually peg maintenance fees to list prices, not discounted prices, and the fees kick in immediately, regardless of whether the software has been installed. the upshot is that the long-term savings are negligible.

Hire a Software Evangelist. "you have to make someone accountable for watching over an application to make sure it has a business impact," says CIo rich bursek at lydian trust. When lydian implemented a multimillion-dollar IP telephony system from Cisco Systems, bursek hired a dedicated person to ensure that users leverage all of the system's features. the evangelist also conducted ongoing training and looked for additional ways to integrate the new IP telephony system with existing software.

Charge for Software Usage. If only one or two departments use a software application that costs plenty in license and maintenance fees, shift the expense to those departmental budgets, suggests Dave Dworkin, director of product management at Isogon, an asset management software and consulting company. "We see these types of applications all the time," he says. "and it's amazing how quickly the department can do them."

Reuse and Retire. business departments seeking a new piece of software at the Vanguard Group, a mutual funds company, take their requests to the tech team, through which all It acquisitions are made. reusing existing standardized software is the team's top priority. "If a [user] group wants an ad hoc reporting tool, we'll go through our [enterprisewide] inventory of apps, and if we have a standard tool, we tell them. then their job becomes knocking out the incumbent software," explains John Mercante, a principal who heads Vanguard's technology operations. Multiple software tools and applications that do the same thing simply aren't tolerated, he says.

and retiring software is just as important as buying it, Mercante emphasizes. "Pulling the plug is a very key metric for us," says Mercante. "We constantly look at what we brought in and what we've retired. It pays huge benefits, but you have to control monitoring and accountability."

—Julia king

4 Ways to Clear OutCostly Shelfware



I.t. delIvery | Vivek Kundra, CTO of the District of Columbia, says he found two compelling reasons to switch the D.C. government over to Gmail and Google Apps: first, its cheap cost would save the taxpayer money by avoiding bloated software contracts. Second, he believes Google technology will help ensure business continuity and the safety of data in the event of a disaster or disruption.

Washington D.C. hasn't been Kundra's first tenure in governmental IT. On September 11, 2001, he took a job as director of infrastructure for technology for Arlington, Virginia. The terrorist attacks at the time made him think how storing all information on premise had its pitfalls. "That was my introduction to public service," he says. "In Arlington, what we realized after those attacks, was that if we had our one main datacenter shut down, we wouldn't be able to support government."

So when he took over as the district's CTO in 2007, he decided that "moving to the cloud" would have its merits, because a company such as Google has so many datacenters

Google Apps are cheaper and

Google Apps are cheaper and

Google Apps

allow for greater are cheaper and allow for greater are cheaper and

business continuity. allow for greater

business continuity. allow for greater

But can they pass business continuity.

But can they pass business continuity.

the enterprise But can they pass

the enterprise But can they pass

test? Why one the enterprise test? Why one the enterprise

government CIO test? Why one

government CIO test? Why one

thinks so. government CIO

thinks so. government CIO

technologytechnologytechnologyEssEntial From InceptIon to ImplementatIon — I.t. that matters

Can Google AppsGo Big Time?Can Google AppsGo Big Time?Can Google Apps

By C.G. lynCh

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Consumer: Any person who has a Gmail

account has access to the consumer

version of Google Apps. this includes the

key functions (Gmail, Calendar, Docs &

Spreadsheets, talk and Google Sites). Ads

run along side many of the applications to

subsidize the user's free experience. Each

user gets 6.7 GB of storage.

Standard: this is utilized by many small

and medium sized businesses and is also

free (with ads). It has everything found

in the consumer version, but it enables

companies to use their own e-mail address

(instead of @gmail) and has mobile access,

an administrator control panel, e-mail

migration tools, and online support.

Premier: For $50 (about rs 2,500) per user

per year, it includes 25 GB of storage per

user and no ads. Aside from all the features

of the standard version, it has e-mail security

provided by Postini, and it comes with APIs

that allow organizations to integrate Google

Apps with enterprise single-sign on systems

and e-mail. It also includes 24-hour

phone support.

—C.G.l

technology that it would ensure better business continuity and security.

"Their datacenters are geographically dispersed," he says. "That was attractive to me from a security perspective."

I'm Feeling Lucky The enterprise version of Google Apps, a software suite that includes e-mail (Gmail), calendar, documents & spreadsheets, wikis (known as Google Sites) and instant messaging costs a mere $50 (about Rs 2,500) per user per year. When Kundra thought of deploying it across the 38,000 employees and 86 agencies his department supported for technology, he saw immense cost savings.

"The average cost of [enterprise] e-mail is 8 dollars (about Rs 400) per month [per user]," he says. "For half that, we

can get more value beyond just e-mail. We're getting Google apps and video for the enterprise. We're getting the ability to share spreadsheets and documents."

The extra value, he says, comes in the Apps. One piece of the Google Apps software that people have been using has been Google Docs & Spreadsheets. As an example, Kundra recently had been working on a performance plan with his deputies. Instead of e-mailing around a document for them to see the objectives that he wanted included, he sent around a Google Doc, which allows his deputies to make suggestions in real time while maintaining a document with one version of the truth.

It's Already Out ThereKundra also believes that users will be pre-disposed to using Google Apps

because, especially from an end-user perspective, it mirrors what technologies they use at home.

"When employees go home, they have access to more technology at home than they do at work," he says. "I said 'wait a minute, people have this access at home, how can I bring it to the government? It made a compelling reason for us to move that direction."

Many of the agencies have been using Google Sites (built on wiki technology) to share information with the public to create and update procurements, Kundra adds. Google Sites can be used by people with no programming experience to build internally-facing websites (intranets) or public websites.

The adoption of Google Apps falls along Kundra's strategy to control

bloated IT costs (long a trouble spot in governmental IT) while providing his employees and the citizens they serve with the best technology possible.

On a Large Canvas"In D.C. government, the schools spent $25 million (about Rs 125 crore) on Peoplesoft and it failed," he says. "That's $25 million down the toilet. Government needs to start asking the question: are we building an IT organization? Or do we want to move out of the system of owning hardware and get services to deliver solutions to customers faster. We spend far too much on enterprise software roll-outs."

So far, he has rolled out Gmail to 2,000 employees spread across the different agencies. But he says the plan is to roll it out to all 38,000 over time to realize the full cost savings. He also says

he plans to pursue more software as a service (SaaS) applications in the future to improve services for employees while curtailing costs.

"Why should I spend millions on enterprise apps when I can do it at one-tenth cost and ten times the speed?" he says. "It's a win-win for me." CIO

C.G. lynch is a staff writer. send feedback on this

feature to [email protected]

ESSEntIAl technology

REAL CIO WORLD | M a y 1 5 , 2 0 0 9 5 5VOl/4 | ISSUE/13

the Flavors of Google Apps

Users should be more pre-disposed to using Google Apps because — especially from an end-user perspective — it mirrors what technologies they use on their own, at home.

Essentisl Tec.indd 55 5/12/2009 6:42:27 PM

Pundit

ApplicAtions | Sometimes I forget that selecting, implementing and paying for core enterprise applications are just the first steps in the long and arduous journey to manage the lifecycle of enterprise applications.

There is, of course, all the fun stuff that happens after the go-live date: ensuring that users are actually using the new ERP, CRM, supply chain or BI apps, that uptime stats have lots of 9s in them, downtime is minimal and planned, response times are lightning fast, and business users have a gut feeling that the overall availability of these critical applications is perfectly acceptable.

All of which are more important in the light of recent survey data from Aberdeen Research relating to organizations' view

of application performance. The survey of 158 organizations, which was held between February and March 2009, reveals several bad business consequences of poor application performance:

Nearly 65 percent of respondents reported declines in employee productivity, up from 58 percent in the 2008 survey.

Just over 60 percent stated that problems with application performance have caused decreases in customer satisfaction, a jump up from 47 percent in 2008.

And last, nearly 40 percent said application problems damaged the company's brand, compared with 32 percent in 2008.

But when Aberdeen segmented the survey data by respondents' functional areas (IT versus business), the data revealed a significant disconnect between the two camps: The business side was 93 percent more likely to report a direct impact on revenues and 30 percent more likely to report an impact on operational and infrastructure costs than IT respondents were.

In other words, IT didn't figure app downtime was that expensive. "This comes as a result of the lack of visibility and resulting understanding of how applications are impacting revenue-generating business

processes," notes research analyst Bojan Simic, in the survey report.

Rather than grumbling quietly in their offices, line-of-business managers "are becoming increasingly interested in how these applications are performing," notes Simic, which, to me, is a great and much-needed development. And, in fact, the business side now wants to prevent application performance issues before end users are impacted, the top challenge cited in the Aberdeen report.

Simic says that "it is no longer good enough to be able to address performance issues in a timely manner. Organizations are increasingly looking to be more proactive when managing application performance."

IT departments, Simic adds, face a new challenge: How to identify and resolve potential performance issues before they frustrate users by impeding their ability to get their jobs done.

Shall IT try to stop global warming as well? How about fix the banking crisis? While we're at it, let's have CIOs develop a peace plan for the Middle East.

I'm not saying that IT can't play its part in remedying the problem. There are plenty of networking tools to help do this. But

network monitoring tools that can detect performance trends aren't enough.

Once again we're treading on familiar ground: the classic business-IT disconnect. This time it reveals that IT doesn't know which apps are crucial to the business, and the business hasn't cared enough to clue IT in on why those apps are so vital. CIO

Send feedback on this column to [email protected]

Business is 93 percent more likely to report a direct impact on revenues from poor app performance than IT is: IT doesn’t seem to figure that app downtime is that expensive.

essenTIal technology

Discordant Notes IT seems unaware that poor app performance is killing busines. Is business and IT lip-synced or is this lip service?By ThomaS Wailgum

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