Are CIOs Now Outsourcing Managers?

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In less than 20 years, the CIO has gone from a one-person technology oracle to an outsourcing manager who has to handle vitally important strategic partnerships. Scott Goodwin, CEO of weavesys, argues this position makes them more important than ever, but they need to be prepared.

Established less than 20 years ago, the role of CIO was created to ensure a CEO’s technology vision would be optimised and delivered. But in the last few years, these best intentions have produced the opposite effect.

Despite envious investment profiles compared to other departments, IT has not delivered the efficiencies or business transformation promised. In fact, about 70 per cent of all IT related projects fail to deliver the desired benefits they had set out to achieve . Perhaps this is why high profile CIOs have left their positions half way through projects in the last decade. The Royal Mail, BT Design, Unilever, Network Rail, Habitat and the London Stock Exchange have all experienced this.

CIOs have been expected to deliver a company’s IT vision, but ended up fire fighting due to no fault of their own. This is because as businesses grow they make acquisitions, which require constant work to integrate. Ironically, the more successful the business, the more acquisitions are made and the more time and resources are required just to keep everything functioning. In the fastest growing organisations, CIOs have been left running just to stand still.

Having worked in the telecoms industry for over 25 years, nowhere has this been more apparent than in our sector where mergers and acquisitions are the norm. More than ever, if a telco wants to create a new service or product, rather than delivering on budget and on time, the CIO is often unfairly seen as a barrier.

By way of example, if a service provider plans to launch a new mobile service to complement its VoIP and broadband offering it will require bespoke technology, integration with existing provisioning and billing systems and a huge amount more. That takes time and money to achieve, but is fraught with challenges and needs to be balanced with existing demands on the CIO.

As a result, by the time the project comes to fruition, it’s often too late for the business to gain a lead on its competitors. Equally, if an enterprise wants to introduce new telecoms systems in-house, the path to success presents the same obstacles. Creating the technology and information infrastructure without external support is just too costly and cumbersome for the CIO to deliver effectively – especially in those fast-growing firms that are struggling with the influx of new systems and technologies that often sit in silos.

This has led to the advent of cloud and outsourced services that enable businesses to satisfy many IT requirements on demand. Knowing that their role is a tough one, CIOs have jumped at the chance to embrace these offerings. Nearly two thirds (59 per cent) suggest that enabling alignment of business and IT strategies using cloud infrastructure is their number one priority . This is precisely because 53 per cent say that launching new services and applications more quickly is a key request they receive from business units .

With these services, CIOs have been able to make the most of their network and technologies. In the telecoms world, for example, they can open call centres at the signing of a contract, implement mobile working policies and technology in days, and offer unified communications over night. All thanks to the cloud.

The impact is that the role of CIO has transformed from leading and implementing a technology vision single handed to managing outsourced contracts, which is arguably their saving grace. They can deliver a technology vision and add real value to the board.

But doing so takes skill. The key lies in accepting the new reality and then implementing strict supplier governance. Throughout the financial crisis this has often meant beating suppliers down on cost. But this comes at a price. Forrester Research has found that endless focus on a cost-based procurement model has left companies with rock bottom prices, but poor delivery and execution track records . Arguably, this leaves the CIO in as tough a place as they would be trying to deliver projects themselves.

The answer according to Forrester is for IT leaders to avoid a centralised procurement process and focus on business outcomes and then build a service that meets those needs rather than a rock-bottom price. They need to ensure they’re managing a portfolio of services that clearly drives value for the CEO. If they don’t they will become marginalised.

For CIOs in the telecoms space, this means looking for partners who offer real business value. Enterprises with new communications needs will require service providers that allow them to communicate effectively, efficiently, economically and securely with their staff, clients and suppliers – not just cheaply. In turn the service provider needs partners that can make it simple and quick to create, tailor and sell new communications products and services. Only by doing so will the CIOs of both types of organisation retain their position as someone who can add real value to the entire ecosystem.

Importantly, there are businesses out there providing services at the point of demand on an OPEX model, helping providers and carriers move up the value chain and bring innovative products, for enterprise and public sector customers, to market.

In essence, the challenge faced by CIOs is one where specialist consultancies and third parties can do their job quicker and better than the CIO themselves. This is a huge shift – and one that completely undermines the CIO’s original role.  But with the right approach to partnerships, CIOs can fulfil the demands of the business better than ever before. In doing so they need to embrace cloud services and work with providers as an extension of their team. Trying to carry on unaided by third parties is no longer an option.

 

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