The worst of the recession is over, and IT management is coming to grips with the "new normal" of slender resources and pressure to make "alignment with business" more than a buzzword. The demand for technical skills is still strong, but if you want to succeed in this "new normal" environment, you have to offer more to your employer -- a lot more.
Consider the career of Ginny Lee, who in 2008 became Intuit's third CIO in just four years. Her predecessors, says the man who hired her, CEO Brad Smith, had the requisite technical chops but lacked a clear understanding of how IT could contribute to the company's overall success. They didn't keep their jobs. "In the world of SaaS, SOA, social networking, and mobile, IT is no longer just about great technology," Smith says.
Lee, a former investment banker with no formal training in computer science, exemplifies a tectonic shift occurring in the world of enterprise IT. Today's CIOs -- and by extension, everyone who works for them -- are living the "new normal," an age where budgets are recovering but still constrained, and where IT is responsible for generating moneymaking ideas and applications. The "new normal" means that business skills are essential if you want to climb the ladder to IT management, and you'd better understand that the days of IT being merely a support organization that just keeps the network running are over.
Yes, things are different, but the world of enterprise IT has not turned upside down. Although it's trendy to think that the days of the big CRM and ERP deployment are past, that's not the case. There's been a noticeable uptick in sales of major enterprise applications this year, fed in part by the resurgent merger and acquisition activity, says Mark White, a principal with Deloitte Consulting. Indeed, Oracle had one of its best quarters ever recently with a big boost from the sale of new licenses for business applications.
There is, however, strong demand for IT hands who have the skills to help deploy a new generation of cloud-enabled applications, virtualization, social networking, and mobile services. And predictive analytics is building on the legacy of traditional business intelligence and data mining to become an essential tool for older businesses and Web-centric companies alike that need to move faster -- and at lower cost -- than ever before.
Above all, the "new normal" is about accepting change. "IT is afraid that its value proposition will go away -- and that's a real fear," says Steve Sterns, a senior manager of IT at Cisco Systems. "Internal IT needs to transform, and it's not fightable. Either adjust and learn the new skills or fail," he says.
The moneymaking CIO
With 40 million customers using its tax, accounting, and payroll products, Intuit generates immense amounts of data. A traditional CIO would view that digital mountain as an asset to be managed and guarded. Lee says her job is to monetize it: "We're responsible for execution, of course. But we also have to ask what is the business opportunity that we see."
Backed by a cadre of data analysts, many of whom sport doctorate degrees, Lee looks across product groups to see what data can be mined and exploited. Here are just two of the revenue-generating projects her IT department generated:
Lee is hardly the only CIO chanting the mantra of monetization. "We're calling this the era of the moneymaking CIO," says Gartner analyst Ken McGee. McGee recounts a recent conversation he had with Terry Kline, the CIO of General Motors. When asked his top priority, Kline did not talk about security or network efficiency. "My top priority is helping GM sell cars," he told the analyst.
For IT to build business, it must first build a new relationship with the business units. Tata Consultancy Service, for example, guides clients to make CIOs a part of the company's core management group. One customer has added a business relationship manager to work in IT to bridge the gap between the techies and the business groups, says Harcharan Sing Rajpal, head of Tata's IT application services for North America.
Within five years, that kind of cooperation won't be optional, and McGee predicts that by 2016 compensation for IT mangers in Global 200 companies will be based, at least in part, on the amount of revenue driven by their departments.
The new IT in action: Applying analytics
It's not coincidental that IBM, Oracle, SAP, and Microsoft have all made massive investments in BI, or business analytics, in the last few years, largely through a series of billion-dollar acquisitions. Oracle bought Hyperion for $3.3 billion; SAP acquired Business Objects for $6.8 billion; IBM bought Cognos for $4.9 billion in 2007, paid $1.2 billion for SPSS in 2009, and plunked down $1.7 billion for Netezza in September.
IBM, for one, is projecting is projecting $16 billion in business analytics and optimization revenue by 2015. To see why Big Blue is so bullish on the sector, consider Infinity Property and Casualty, or IPACC, a supplier of auto insurance with a network of more than 12,000 independent agents and revenue close to $1 billion. Large as it is, once IPACC weathered the worst of the recession, the company realized that it had to find significant efficiencies in the claims process, says senior vice president William Dibble.
A cornerstone of the cost-cutting effort is the use of new technologies, ranging from the simplicity of a cell phone camera to the complexity of advanced analytics software. Instead of sending an agent to take pictures of damaged autos, IPACC encourages its customers to photograph the wreck themselves, saving money and time.
Much more complex, though, is the task of quickly deciding which claims are probably not the fault of its policyholders. "We want to go after the low-hanging fruit first," says Dibble. With the help of IBM software, IPACC developed an analytics application that sorts through incoming claims, looking for keywords and phrases like "parked" or "garage." Claims with phrases that indicate the customer probably wasn't at fault are fast-tracked, freeing up adjusters to deal with more complex cases.
Even more challenging is a still nascent effort to use an IBM analytics tool that prompts claims agents to ask the right question. For example, Dibble says, a client may mention that he's miles from home after an accident. As the agent enters that fact, IBM SPSS Decision Management will prompt the logical question, "Would you like me to arrange a rental car?"
The really difficult part of the application is dealing with unstructured data, says Dibble. But the payoff could be substantial. "Unstructured data is the richest unmined vein," says White, the Deloitte consultant. Indeed, finding ways to make use of unstructured data is a key task as IT departments look for ways to leverage corporate data into cost savings or, better still, revenue-generating uses.
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