CEOs urged to rethink corporate approach to IT

If chief executive officers (CEOs) don’t want to be wiped out by their competitors, they not only have to invest in information technology but they must also rethink how to deploy IT within their companies, a high profile panel of IT executives told attendees of the Forbes CEO forum in London on Thursday.

According to Andy Green, CEO for the Global Services division of BT Group PLC, the goal of a CEO should be to set up an IT system that will provide a company with real-time access to a single view of the customer.

“This is a leadership issue. I have been speaking to CEOs and CIOs from around the world and I am concerned about how fast I have seen those leaders move away from a customer-centric view of the world. This is not a technological problem, it is a business leadership issue,” Green said.

A similar stance was shared by the two other members of the panel, Patrick de Smedt, chairman of Microsoft Corp. EMEA (Europe, Middle East & Africa) and Amnon Landan, CEO of the software vendor Mercury Interactive Corp. Both men called on CEOs to invest in IT, but to do so wisely and with an eye firmly on a broad plan that drives to create a culture of innovation.

“IT is still at a very embryonic stage. But how companies are deploying IT is still very amateurish,” Landan said. “Top executives in companies today understand the technology, but they don’t know how to apply it in an efficient manner. Frankly, the current picture is pretty bleak.”

Standardization is important, the panel stressed, as is the need to drive the automation of business processes. Additionally, the question from the CEO should not be “what is the new technology?” but rather “how can we effectively integrate the technology we already have?” the IT executives said.

BT’s Green had three tips for CEOs. A CEO must first spend time on IT, specifically with IT suppliers and with the IT staff within the corporation. Secondly, companies should not run “IT projects” but strive to run “change” projects. “IT projects never work unless people’s jobs change as a result,” Green said.

The third tip from Green was that the one exception to that rule is to get companies to invest in a flexible IP (Internet Protocol) infrastructure. “The good news is that I don’t think this has to cost you a lot of money, but you must enable your company to be flexible in the way you move data around your company,” Green said.

Microsoft’s de Smedt pointed to his own company as an example of how executives should be thinking about IT. “You have got to simplify your IT environment. For example, we have centralized all of our servers on Windows and have rid ourselves of mainframes. We also use no customized software, it is all packaged software — for procurement, we use SAP (AG) — and we are using relatively simple software to develop business applications that allows us to get much more value out of the information that we already have.”

Where CEOs often fail, according to Mercury Interactive’s Landan, is in not having a notion of processes or of quality control. “The internal dynamics of IT operations is too often running in a vacuum, from a technology point of view, which creates a misalignment. The IT guy is looking at what’s happening on the network while not having an end-to-end business viewpoint. The CEO has to make sure that everything works for the end-user.”

Green said that even BT has a long way to go in making its IT processes customer-centric. “That, along with providing real-time access to information are the biggest challenges at BT,” Green said.

Green pointed to the examples of retail giants Wal-Mart Stores Inc. and Tesco Ltd., search engine company Google Inc., online banking services company Egg PLC and economy airline Ryanair Ltd. as examples of corporations that have successfully deployed technology to remake their business models around the self-service of customers.

“There has been no moment when IT has been more important. You must use technology to create new added value,” Green said. He added that Europe is clearly lagging behind the U.S. when it comes to understanding and applying new concepts.

According to Landan, companies need a new breed of CEO, people who can bridge the gap between a company’s labs and scientists and its business people, something that is beginning to happen in the U.S. but still lacking in Europe.

A culture of innovation is very important for a CEO to help foster, de Smedt said. “Look specifically at the software business Microsoft has. You build upon previous waves and create a virtuous cycle. Now we’re only half way into the adoption of the Internet side and there is still enough potential to drive innovation forward.”

According to de Smedt, Microsoft currently has 600 million customers worldwide and spends US$7 billion on research and development, which is second only to the pharmaceutical company Pfizer Inc. “Such investment is very important and the U.S. is spending more in both private industry and government sectors than Europe is. An enabling framework is critical to making innovation,” he said. “But it is all a question of ways to drive the business side up and the total cost of ownership down.”

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Jim Love, Chief Content Officer, IT World Canada

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