CIOs mull how to innovate and tighten belts simultaneously

CIOs face a common set of thorny challenges these days, namely the pressure to deliver innovations even as they seek to cut or hold down spending, according to an array of senior IT executives who spoke on Tuesday at the MIT Sloan CIO Symposium in Cambridge, Massachusetts.

“IT is a business within a business,” said Tom Sanzone, senior vice president at Booz Allen Hamilton and a former CIO at Credit Suisse, during a panel discussion. “It should be run that way.”

“When you look at IT services you say, can I deliver these services at my scale, at a price the market can bear,” Sanzone added.

But at the same time, CIOs can no longer sacrifice quality, other panelists said.

“We have accepted a very poor quality of product for a very long time, and that has been the major filter through which the business perceives us,” said Steven John, strategic CIO at cloud ERP (enterprise resource planning) software vendor Workday. “We need to change that.”

Global systems integrator Accenture fits its IT spending into “two buckets,” one for operating expenses and another for investments in IT, said CIO Frank Modruson. Each year, his teams are urged to find ways to lower operating costs and move the money over to investments, according to Modruson.

There are some likely targets, he added. “Email costs, every year they should go down.”

But the company isn’t afraid to spend big if there’s enough of a payoff, according to Modruson.

For one thing, Accenture “blew up its whole network” in 2007, consolidating and modernizing the system. While the job cost US$100 million, it paid for itself in just a few years, he said. “Now we’re getting ready to do it again.”

Those improvements are laying the groundwork for other innovations at Accenture, particularly in communications.

“Nothing really important happens in email,” Modruson said. “We’ve actually moved a lot more to video to get that [personal] interaction. My remote meetings are on video now.”

“Desktop video has gotten pretty cheap,” he added. “It costs us less than a penny a minute. It’s next to free. It’s going to show up everywhere.”

Sometimes CIOs can’t persuade business executives to fund what may be worthwhile projects. If that happens, those eager to stay the course have some options, according to Bill Krivoshik, senior vice president and CIO at Time Warner.

“You’re in a position of fiscal responsibility,” he said. “You need to align your goals with the company’s. You’re not going to hide things. But there are alternative ways to fund it.”

CIOs should look to get a proof-of-concept exercise off the ground for the idea, Krivoshik said. If it works, then company leadership can be persuaded to fund it, he said. “If not, then you only spent a little bit of money.”

But Time Warner is also making a fundamental change to its IT operations.

The company is now in the process of migrating its human-resources software operations to Workday’s HR module companywide, Krivoshik said in an interview after the panel discussion. Workday will replace a wide variety of HR systems, he said.

The first implementations will be done in the Time Inc. division and corporate headquarters this year, with other business units coming later, he said. The project is scheduled for completion in early 2014, according to Krivoshik.

Workday is hoping to also lure large multinational conglomerates like Time Warner to its financials software module. Krivoshik isn’t ready to commit to that, though.

“We’ll look at it,” he said. “We only want to focus on one big ERP [area] at a time.”

That sense of restraint is reflected in how Krivoshik views the role of today’s CIO.

“I don’t think it’s changing,” he said. “I think the good CIOs have been ones who use technology to help the business. It’s just that the tools in the toolkit have changed. The underlying tenet, to help grow the top line, is the same.”

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