Inside the CIO’s mind

CIOs and senior IT decision makers are under intense pressure in the current economic climate. Budget cuts, postponed investments, and hiring freezes combined with CEO expectations to innovate and deliver improved performance put CIOs in a tough spot. 2010 will be another very challenging year for CIOs as they face the need to run lean and efficient IT organizations and, at the same time, to leverage new technologies that enhance business performance and help differentiate the company from competitors.

The core question in every CIO’s mind is what is the purpose of having this IT organization in the center of the company? The response to this question guides them to make the right choices and set the right priorities. Over the past year, I have had an opportunity to get insights into the inner working of the IT organizations of more than 75 large customers across the globe and across various industries. I found that CIOs have a unique vantage point; they sit at the hub of the organization and thus are able to contribute in more powerful ways than their peers in other C-level roles.
While looking for patterns among decision-making criteria and strategic priorities, I observed that, just like our marketing friends, CIOs have 4Ps that are crucial to their success:

• Business Performance
• Employee Productivity
• Sustainable Profitability
• Talented People

 

• Business Performance
  The CIO, by definition, is expected to deploy technology that helps all of the business divisions enhance their performance. Toward this end, they adopt strategies like business intelligence, strengthening of value-chain systems (through ERP, CRM, SRM, etc.), creating or improving strategic applications, and improving IT security and business continuity.
• Employee Productivity
  Here, the core focus is on how to get more value from the employees and available resources. CIOs use strategies such as desktop optimization, messaging, collaboration, web conferencing, VOIP, and mobile access to drive productivity. The CIO also leads the IT organization itself and, in that capacity, must evaluate and choose from strategies like server consolidation, ITIL adoption, and datacenter optimization to enhance the productivity of IT.
• Sustainable Profitability
  To be truly effective, the IT organization must contribute directly to the top or bottom line of the company. Stand-out CIOs use technology to help generate more business from current and new customers, design or enable innovative new products and services, contribute to the creation of new business strategies, and devise ways to use IT to differentiate the company from the competition.
• Talented People
  The CIO cannot achieve his goals alone. He needs to build a strong team and hence invests in capabilities, capacity, and culture. He must ensure that IT staff has opportunities to learn, earn, and grow in their careers.

From a bag that contains hundreds of potential strategies, CIOs pick and choose a handful of them and prioritize them to achieve their goals. How they set those priorities — particularly for spending — depends upon both external forces and internal forces. The external forces include industry environment, industry trends, competition, regulation, and the geopolitical climate. The internal forces include business strategies and objectives, infrastructure maturity, and the maturity of various business capabilities.

To get CIO’s attention and investment, you must have products or services in line with their priority, an ability to have a strategic discussion and a business case to justify ROI/TCO.

Will Newspaper Adapt or Die?

It seems hopeless. How can the Sumo-Newspaper Industry fight with Ninja-Internet? 2009 saw the biggest decline in newspaper profitability in US history. The closure and bankruptcies were in headlines and even prompted senate hearing on the future of the industry. The terror of blogging which provides information from Internet junkies in Pajamas is sending chills up the spine of the Industry. The attack is coming from many directions. News is expected to be free on the Internet, which attacks the printed newspaper sales revenue, while the classified advertisement revenue is under attack from sites like Craigslist, Oodle etc. The impression advertisement is also losing battle to online advertisements. So far, online coupons sites have not been effectively able to challenge the Sunday Newspaper coupons. But the upcoming mobile Apps are challenging that frontier too.

Ten years ago, it was a challenge for websites to get people to spend time for pleasure in front of a computer screen. Today, the problem is to get people under 50 or so to pick up a newspaper. Today a very few people aged between 12 and 25 ever read newspaper, but they spend a lot of time online, watch TV, play video games, use mobile phone apps and do web surfing on mobile devices.

The recent 42% fall in printed classified ads revenue and 30% fall in printed newspaper revenue shook the industry. On the contrary growing online advertisement sales created mega companies like Google. However, online newspaper revenues are grossly below the sustainable levels and growth is not even promising enough to even substitute today’s anemic revenue numbers over the next 5 years. Consequently, over 12,000 journalists have lost their jobs since 2007, according to Columbia Journalism Review. In the context of life science, Darwin is famed for his quotation – we all must adapt or die. This has proven right even in the business world over the last few centuries which is evident by the churn of companies in Dow and S&P 500.

The situation is similar to a burning platform, so the key challenge is not willingness to change but clarity of future state of the Industry and sense of urgency. The gloomy outlook is not universal – in some countries, such as India, the newspaper continues to dominate the media landscape, as Internet penetration remains merely 7.1% and only 50% of households own a TV. Is it just matter of time until the industry switches fully to the internet or is it already too late?