Bill Gates, in his 1999 book, The Speed of Thought, proclaimed at the outset that “business is going to change more in the next 10 years than it has in the last 50”; and said that “these changes will occur because of the flow of digital information”. Now 10 years since, the world of business has indeed changed in scale and complexity, due largely to the impact of the ever-evolving information technology.
The economic upheavals the world has gone through this last year have given rise to new ways of viewing market and organizational behaviors. Conventional wisdom asserts that people – customers, employees, managers – make logical decisions. No longer, it seems. Enter the irrational behaviors; exit the rational.
Despite the new complex paradigm shifts in business thinking the financial crisis has triggered, there remains a strong case for sticking to good old principles of rational management. The CEO must still be relentless in driving the company towards its vision of growth and profitability; the CFO must continue to make sense of the returns on the company’s investments; and the Human Resource Head must, more than ever, improve each employee’s level of “engagement”.
How about the Chief Information Officer? What about the usually huge investments made in information technology -- purportedly to gain on competition, to improve customer service, to dominate a market, or simply to deliver up-to-the-minute sales and inventory statistics on every product?
We’ve written previously how the CFO and the HR Head must do their part in greater ways not seen before – because of the tremendous pressure the CEO must overcome to navigate the prevailing global financial crisis. Surely, we cannot understate the role of the CIO, considering the typically sizable investment in technology where there is constant apprehension that probably only 20% is being realized of its potential benefit.
I turned to Mr. Renato Derpo, a pioneer and an expert in IT, for his insights. What follows is our interview, which has been edited for purposes of this contribution.
Mr. Derpo has had more than 26 years of experience in progressive positions in the different areas of IT, encompassing applications development, applications support, process quality assurance, IT infrastructure support, end-user support or IT Help Desk. His career gave him both local and global exposure with companies like Corporate Information Solutions, Inc., a software development and IT consultancy company owned by Meralco, global companies such as SeaLand, eTelecare, Safeway, Trend Micro, and Baker & McKenzie.
Mr. Derpo’s years of experience, characterized by breadth in terms of industry and exposure in all the areas of IT, plus his graduate studies in MBA and Strategic Business Economics, has built his expertise in managing big IT organizations supporting global operations. I posed the following questions to Mr. Derpo:
Guillermo: In what way is IT viewed by the CEO and the organization?
Derpo: Depending on the industry as well as the personality of the CEO, IT is viewed as simply to maintain the level of business or as an enabler to generate process efficiencies and provide exceptional customer service so as to increase profits. I have seen CEOs who have viewed IT as a mere support group, much like a tool that is taken out of the closet when needed. I have also seen CEOs who see IT as a necessary utility that should be there at all times. If it goes down, they go to all lengths to get it back up at all costs. There are some CEOs, on the other hand, who have raised IT to the strategic level, helping the business not only achieve an advantage over competition, but also generate growth by gaining market share or even creating new markets.
Guillermo: How could the CIO help the CEO understand technology and its effective use in the company?
Derpo: The complexity of information technology is one of the biggest challenges that a CEO would have when dealing with his CIO. The digital age brought about many technology solutions with different levels of costs and company fit. Even if the CEO is technically savvy, he would not have the time to evaluate all the options, let alone be competent enough to decide on which is best for the company. That is why he needs to rely on his CIO to recommend the best technology solution, expect him to execute it on time and within budget and provide assurance that the business objectives intended are met. In big companies, IT is indispensable in supporting all the business functions. Conceivably, these companies have significant needs for IT support, which leads to a long list of IT projects and a huge capital investment. The CIO’s role is to help the CEO and the rest of top management prioritize and manage all these IT projects. With limited budget and resources, some companies have chosen to limit work to two major IT projects per year. This has proven effective in getting the CEO and the rest of top management in keeping IT projects to the most critical ones, focusing IT resources to those that generate the most value to the business. Another role of the CIO is to tell the CEO to pull the plug on projects that are doomed to fail. Not all IT projects will be successful for one reason or another. The earlier the CIO gives the recommendation, the better for the company.
Guillermo: Is IT the first expense to be scaled down in the face of economic crisis?
Derpo: It could well be, especially if IT does not directly generate revenues for the company. I should say that there are a number of opportunities within IT to save on; e.g., reducing training and travel, postponing hardware upgrades, renegotiating maintenance contracts, integrating functions to reduce headcount, outsourcing or off-shoring. The CIO, however, has to balance these out with other objectives like continuity of IT operations and critical requirements for IT projects. The cost still needs to be weighed according to benefits and risks. Being creative in cost reduction is imperative for a CIO. For example, training is usually identified as one of the first things to be cut; but for the IT staff, training is a huge motivator and the CIO will risk losing good people if training is withheld. Yes, costly training must stop, but not the development of people. There are other less costly ways to get people skilled up – e.g., internal training sessions, discussion groups, webinars (a lot are even free), vendor seminars, vendor websites, technology forums, books, etc.
Guillermo: IT has been sold as an enabler of the business strategy. How can it be realized amid the challenges of business today?
Derpo: We hear and read a lot of success stories on how IT had driven company growth and achieved customer satisfaction levels during good times. However, during bad times, it is really how much the company had invested and planned for crisis during good times that would help it weather the challenges of the financial crisis that we are experiencing now. Years ago, trailblazing companies had embarked on shared services, outsourcing and off-shoring, which are business strategies that are enabled by IT investments. Today, those companies are way ahead in handling the crisis over companies that are just trying to catch up.
Guillermo: Can companies do without IT, especially if the cost of technology is so high?
Derpo: In today’s world, one cannot avoid IT. The level of IT can vary from a PC and Microsoft Office programs worth a couple of hundred dollars to a global IT infrastructure and a portfolio of systems (including an ERP) worth millions of dollars. However, one could now lease through the internet café or through companies providing Software as a Service (SaaS), avoiding the need for a huge capital outlay in favor of a monthly expense item. There are already options today that will match the needs of the company.
Guillermo: Can IT really generate value it is expected to do?
Derpo: I would say, definitely yes. IT generates the business value based on how IT is viewed by top management, by the relationships between the CIO and the other C-Level executives, by how IT is aligned with the business strategies and needs, and, of course, by whether the IT organization delivers on its commitments.
Indeed, technology has transformed the workplace. Meanwhile, increased global economic threats have only magnified the importance of IT in propelling the business. Beyond cutting costs, corporate leaders are looking to the CIO to contribute in a significant scale to help the company break through -- making use of technology -- with new business approaches to make new profits and break away from competition, particularly in crisis situations.