Why is CIO turnover down? One word – Digital.
It wasn’t long ago that the joke was: “My 2 year car lease will last longer than the CIO”.
Times have changed, though. With the average CIO tenure approaching 5 1/2 years, he or she can probably pay off a standard car loan on that brand new Tesla model S they’ve been eying.
Why? CIOs are increasingly involved in business strategy as IT moves from a cost center to an investment center. And strategy takes time. Companies are also now competing with strange new entrants:
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”
- Tom Goodwin, TechCrunch
Digital natives are disrupting industries across the globe – this is why outgoing Cisco CEO John chambers talked about the coming disruption ahead driven by digital.
“Forty percent of businesses… will not exist in a meaningful way in 10 years" and “70% of companies would "attempt" to go digital but only 30% of those would succeed.”
- Cisco CEO John Chambers
At either a conscious or subconscious level, most senior leaders understand the need to make technology a more deliberative part of their strategy planning process, (hence the growing importance of the CIO role in strategy) but change is difficult, and transformative change is extremely difficult.
“The IT discipline within most enterprises has developed a set of behaviors and beliefs over many years, which are ill-suited to exploiting digital opportunities and responding to digital threats.”
Before anything happens, the executive dialogue needs to change. Most business spend between 3 and 5 percent of revenue on IT. Cost cutting in IT can at most shave off 1% of overall IT cost.
“I went to the CEO and told him I could cut IT costs by 20% by moving to the “cloud”. He responded that a 20% reduction in a cost that was 3% of revenue, or a total margin improvement of 0.6% wasn’t exactly “strategic”. He also said my predecessor tried the cloud and the way it was implemented it actually turned out to be more expensive than before.”
- Newly “Liberated” CIO job seeker
To be relevant to the business, CIOs have to talk about more than cost and uptime – they need to be able to build momentum by educating their business counterparts on how these emerging technologies can transform a company from a business perspective.
Once the leadership team is on board, cloud, big data, social and mobile all have to be part of a cohesive technology and business strategy of transforming the business over time. And this will take time and investment, if companies wait until they’re being disrupted by newcomers, it’s already too late.
The CIO plays a pivotal role in all of this, which is to bridge the business and technology strategy chasm.
A great first step towards digital transformation for CIO is to develop a hybrid cloud strategy that enables both migration and maintenance of legacy applications and incorporation of new technologies like big data analytics, data visualization, social data integration, etc.
Design your hybrid cloud foundation to minimize technical debt (rework)
15 years ago it was virtualization, then it was cloud, and now we’re seeing the emergence of new container technologies like Docker emerge – all layers of abstraction intended to increase utilization and improve flexibility. Even with all these technologies, IT infrastructure in general is still dramatically underutilized when compared to other types of capital equipment.
It always amazes me to see companies still managing IT assets by spreadsheet, even virtual ones.
Develop a service management strategy that is designed for hybrid cloud architectures and is easy to deploy and manage. Key attributes are security integration, 3rd party vendor interoperability, reference architectures, extensibility with standard APIs, intelligent automation of standard management tasks like provisioning and de-provisioning of virtual and physical resources, managing role based access, capacity management, SLA management and monitoring.
Once a solid foundation is in place, target applications with the best ROI in terms of improving a company’s business. These are typically applications that are customer facing, or contain data that, when combined with other data and platforms (i.e. social, mobile) and/or could be most easily ported to hybrid architectures.
CIOs also need to gradually transform their organizations from a capabilities perspective and move their organization from traditional methods like application up time, response time and traditional Capex methods of measuring infrastructure consumption to business outcome based metrics. When moving from traditional on premise to hybrid, it’s a good time to implement tools that can not only accurately measure infrastructure usage in both on and off premise environments ties to applications, but can also be easily integrated into other components of a digital enterprise platform, like using Flume or Sqoop (depending on data source) to integrate infrastructure cost and performance data into a Hadoop cluster when data analytics is tying these costs to social media (tweets about your product for example) Imagine correlating user interface design changes to Facebook likes for example – very powerful.
Change is hard - it will take organizations intense effort over a span of years to become truly digital. All functions from IT to HR, finance, marketing, sales, R&D, and operations will have to work together to to transform their organizations and business processes in addition to technology. More than ever, the CIO must provide business leadership in additional to technical leadership..