While IT delivers a basic capability, complementary capabilities must also be developed within the organisation for any expected value to be generated. For example, the CIO and his or her team can deploy CRM technology but complementary capabilities -- for example, in customer management -- have to be developed by sales and marketing if this technology is going to be leveraged. Typically, adoption requires change and to be effective, this change must be managed.

As discussed in Part 1, the conundrum is that many CIOs are charged with delivering value from IT yet have no control or authority over their business users as to what has to happen for this value to emerge. No wonder many are frustrated!

CIO recruiters tell us that they frequently have to educate CEOs, boards and recruitment committees as to what a modern CIO can be expected to achieve. One recruiter noted to us that “many leadership teams do not know what [a good CIO] looks like because they have never seen good;” their expectation is for someone to “keep the lights on” and not an executive who can contribute to strategy and innovation. Another head-hunter minces when he reads a client brief that is basically targeted at hiring CIOs to sort out “their problem with IT” so the executive team can get on with running the business!

While 29% of CIOs in our survey report that they sometimes get involved in helping to define the business strategy, a staggering 55% reveal that they never do. This is somewhat expected, given that 64% do not report into the CEO, but into other corporate functions, especially finance and operations. Many CIOs argue that their direct boss is ill-positioned to represent IT and all it can bring to their company.

Another surprise from our survey is that CIOs report a low level of “digital literacy” among their leadership team colleagues; nearly half, (49%) say that execs don’t understand the capabilities and potential impact of new and emerging technologies. Even more worrying, however, is that they don’t understand how IT value is generated and what their role is as business leaders in this process. Just because an executive uses an iPad or books flights using the Internet does not mean that they understand how to lead and manage IT at an enterprise level.

Missed Opportunities

Perhaps not unexpectedly, two-thirds, (67%) of CIOs report that their companies don’t use IT to grow the business to the extent that it could, leading them to miss out on significant opportunities. Many of these issues have been suggested for decades and this research provides evidence that they still prevail. There is clearly a “knowing-doing” gap.

A case in point was offered by a non-IT executive from a global consumer goods company who attended an education programme that I recently led on managing IT projects to increase the likelihood of successful outcomes. An MBA graduate of a top school, he was a 30-year veteran with his company and, as he said himself, had “been a victim of IT” over the years. When the programme concluded, he noted that he and his organisation had run projects is the same way for three decades and he “never knew there was an alternative.”

CEOs and CXOs need to see the alternatives. They need to hear that problems with IT are not with IT per se, but are due to the lack of business leadership of IT. As business leaders, they, as well as their CIO, have a role to play. It’s their turn to actively join the IT team.

Joe Peppard is a Professor at the Cranfield School of Management in the U.K.

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Writer’s Note: Together with John Thorp (author of The Information Paradox: Realizing the Business Benefits of Information Technology, McGraw-Hill Ryerson, 2003), I have being conducting research on the role of CEOs and C-suite members in the process of generating real business value from IT.

We have written an article titled, “What Every CEO Should Know and Do about IT,” which reports the findings of this research together with a framework and guidance for CEOs. Due to copyright restrictions, we cannot post a link to this article, but can make it available if you send me an email at j.peppard@cranfield.ac.uk.

Brook Manville and I have a new book, Judgment Calls:Twelve Stories of Big Decisions and the Teams that Got Them Right, (Harvard Business Press) --now available. The subject is “organizational judgment,” or how organizations can build ongoing capabilities for better decision making. One approach to reaching that goal is to broaden participation in decision processes. The storage and software company EMC, and the consumer goods giant Procter & Gamble, provide two great examples of transformation in that regard.

While EMC’s corporate strategy was very broad-based, it used social media tools to change corporate culture and build consensus. P&G, meanwhile, took an IT-driven approach from the start. In fact, if you’re an IT leader, it’s important to realize that a big part of your job is improving organizational judgment. You can do it through greater participation in decision processes, through data and analytics, or even automated decision-making applications.

Moving From Control to a Collaboration Culture

EMC traditionally had a hierarchical, “command and control” culture. However, that culture began to change over time with a variety of acquisitions and geographical expansion. By 2007, the company had changed enough so that executives decided to implement a social media platform. Called EMC|One, it began as a controllable, manageable environment that would enable a more participative “2.0 culture” for the company. The journey is described in a blog by EMC’s VP and Global Marketing CTO, Chuck Hollis, here.

Initially, the online discussions on the EMC|One platform involved hobbies more than business. But in mid-2008, the company’s financial position, like that of many companies in its industry, began to worsen, and EVP and CFO David Goulden established a “cost transformation” project to reduce costs and maintain profitability. One of the initial policy changes involved vacations and because some employees found that change unclear or confusing, they used EMC|One as a vehicle for discussion and clarification. The cost transformation team found these discussions useful in implementing the new policy.

Shortly thereafter, Michelle Lavoie, a middle manager in EMC’s services business, posted a message on EMC|One encouraging  their employees to offer cost-reduction suggestions of their own. She also suggested some ideas herself. That discussion took off, with more than 26,000 views and 364 responses — and new ones were still coming in 18 months later.

When EMC executives announced a pay cut in April 2009, the full impact of the social platform became clear. As Lavoie commented:

When the 5% pay cut was announced, along with the addition of five days of paid vacation for the year, a lot of people understood that they made a difference, and that the discussions were being heard. The pay cut was difficult for some people, but we were proud and happy to do it because we’d been discussing it all along.

Goulden, EMC’s CFO, commenting on the overall value of EMC|One in the cost reduction initiative, said:

Ultimately, we distilled about 200 different ideas from employees on EMC|One. ... It’s clear that the feeling of participation and morale issues were the most important contribution from EMC|One. People had a sense of being part of the process, as opposed to receiving memos about it.

Lavoie now has a new job as manager of EMC|One, and EMC has a new, more participative culture that is sure to yield better decisions in the future.

Spheres of Business Intelligence and Analytics at P&G

Procter & Gamble is another organization using IT to improve its organizational judgment, but in a different way. It is using business intelligence and analytics to speed up the process of data-based decisions. The company’s IT group — known more appropriately as Information and Decision Solutions (IDS) — has created a series of Business Spheres, specially designed rooms for making decisions based on visual information displays. IDS has rolled out more than 40 of these spheres around the world, and they are transforming how P&G leaders monitor and manage the business.

Besides making technology in general a top priority at the company, P&G takes decision making very seriously and describes its IDS as “a key business enabler that advances technology tools, strategic development, collaboration, and decision making.” The Business Spheres clearly demonstrates this emphasis.

As these examples illustrate, IT isn’t the only resource an organization needs to create the capability for better decisions over time, but it’s a pretty important one. And if you’re not using your IT to create better judgment, your organization isn’t making the kind of decisions that it should.

Tom Davenport is the President's Distinguished Professor of IT and Management at Babson College and Research Director of the International Institute for Analytics.

Want to read a sample chapter of the new book? Register and download the chapter about the Opportunities of Technology and Analytics at Partners Healthcare here.

To help enterprises incorporate mainframe computing into the cloud, CA Technologies has developed a next-generation mainframe management strategy and products.

Over the last three years, CA Technologies has introduced several mainframe products and services designed to reduce costs, sustain IT skills and increase agility.  Two developments over the last 18 months led the company to evolve its strategy even further, Dayton Semerjian, General Manager, Mainframe, told me recently. First, enterprises are quickly embracing cloud while also struggling to figure out how to adapt their current IT architectures to it. [See related article.] Second, IBM last year introduced a new hybrid platform, the zEnterprise System, that brings mainframe and distributed computing together in one box.

These trends mean that “the mainframe is becoming more integrated with [current] data centers,” according to Semerjian. “It is being blended into a multi-vendor environment.” That, in turn, will require tools and IT staff that can work across both mainframe and distributed architectures. The latest strategy aims to meet those needs.

According to David Hodgson, Senior Vice President Strategy and Product Management, Mainframe, CA Technologies, organizations  who have adopted Linux on System z, which enables enterprises to run Linux servers on the mainframe, are already  moving toward integrated environments. The Linux migration requires them to merge mainframe and distributed computing staff, he says: “It’s a microcosm of the bigger picture and a sign of what may be happening on a larger scale.”

In fact, an August 2011 CA Technologies survey of 500 CIOs and senior IT managers in Europe and North America, indicates such convergence is already under way at many enterprises. Fifty-one percent of respondents said they shared architects across mainframe and distributed platforms; 39 had common management, meaning that someone at a level below the CIO was responsible for unifying mainframe and distributed platforms; and 30 percent had a shared budget. “They are spending across platforms to meet business needs,” says Semerjian. “They are viewing it as a business spend, not a platform spend.”

To extend its strategy to further enable this convergence, the executives noted that CA Technologies will:

• Support IBM’s Z Enterprise with expanded cross-enterprise management tools. 
• Help IT organizations use their mainframes in private and hybrid clouds.
• Empower an “ambidextrous workforce” – a new generation of IT staff that can work in both mainframe and distributed computing environments.
• Extend management support to a broad, heterogeneous environment.

The company is putting action behind its words. Announcing the strategy at CA World 2011, held in November in Las Vegas, the company detailed several product and service enhancements to carry it out.  The company is opening up its Mainframe Software Manager (MSM) product, for example, to other vendors so that IT organizations that use the software will have access to even more capabilities from the common management console that MSM provides.  In addition, the company announced plans to port AppLogic, its turnkey cloud-computing platform that currently runs on distributed platforms, to the mainframe.

“AppLogic on the mainframe will enable enterprises to build a cloud that encompasses distributed and mainframe platforms and enable workloads to be shifted across these platforms,” says Hodgson.

That’s the whole idea behind cloud, after all. It shouldn’t matter where the processing is happening.  Tools that bridge the gap between mainframe and distributed computing will free enterprises to use the best platform for any particular workload, making overall IT operations more efficient and cost effective. 

I recently created the following video for a session at CA World 2011 in Las Vegas on Business Technology Management. The goal was to spice up the presentation and hopefully get a few laughs with a video that pokes fun at both IT and business executives. The ultimate point of the video is that IT isn’t communicating with the business in terms that the business actually cares about- cost and value. The business doesn’t care about the specifics of uptime, availability and service level agreements. They care that IT is ultimately helping the business achieve their goals of driving growth and innovation while also reducing costs. So enjoy the video and feel free to share with friends. I’m looking forward to creating more.

There is a revolution happening with the rise of social, mobile, and cloud computing, the blurring lines between business and personal, and the proliferation of connected devices. This ‘consumerization of IT’ is forcing radical change on businesses (and governments), which are in turn forcing radical change on IT.

This is clear from a fascinating new research study conducted by IDC , released  by CA Technologies, into how the consumerization of IT is affecting business, and how IT is changing to accommodate this change.

And guess what …

It’s all about you!

Consider how you are driving demand for online technology.

This new IDC research shows that the majority of connected consumers (like you) regularly use e-mail, manage finances, pay bills, shop, use instant messaging, log into social websites, watch videos, download applications, and view photos - all online. Perhaps you also buy insurance, manage investments, video or voice chat, tweet, read the newspaper, book travel, check-in to your flights, and more - all online.

IDC’s data suggest you are probably sharing information too, not just consuming it. On social media alone, almost a third of consumers generate their own posts every day, and nearly three-quarters do so at least once a week. Over 60% of you are sharing photos, over half are sharing updates, and almost a third are sharing your location. Somewhat alarmingly, however, up to 80% are exposing personal information like credit card numbers, birthdays, location, finances, and more.

It’s also about your devices

Now consider how you are accessing online technology.

Consumers like you are connecting through an ever-expanding array of devices and platforms.

Consumers like you are connecting through an ever-expanding array of devices and platforms. IDC found that 80% of consumers regularly access the Internet with a smartphone (just 10% less than via a laptop), generating over one fifth of online transactions. Another 36% access the Internet with a tablet, driving almost 10% of online transactions. Then there are other connected devices like set-top boxes, gaming consoles, smart TVs, VOIP devices, and more.

This is in addition the expanding list of connected business devices, like elevators, electricity meters, check-in desks, information kiosks, ATM/POS units, railway switches, traffic lights, environmental controls, medical devices, cash registers, cooking equipment, doorway sensors, and more.

To read the bottom line, click here.

The prefix “Big” (or sometimes “King”) has been used for a commodity that changed the nature of society and commerce, for example Big Oil, Big Coal and King Cotton. Well, there is a new Big commodity on the block, and it is promising to reshape commerce, businesses and even society. This is Big Data.

Big Data refers to the confluence of multiple rivers of data, including CRM; network analysis; social media; tracking research; behavioural targeting (for example, advertising company WPP Group’s plan to profile 600 million people in its Xaxis database); public data; and the harvesting of information from social activities such as geo-location platforms like foursquare and social shopping sites such as Groupon and Gilt Groupe.

For retail businesses, the initial deliverable from Big Data — and its relative, business intelligence — is granular knowledge about who is doing what and using that information to improve marketing offers and customer service. Often  quoted examples include: U.K. retailer Tesco and its customer loyalty card operation; Amazon.com, and its book recommendations; and Bharti Airtel, the Indian telco that has used network analysis on its more than 3 billion calls a day to reduce churn.

However, the history of Big Data so far suggests that there will be more losers than winners as a result of the new technologies — although the winners will do very well. For instance, researchers at the Butler Group and The Economist have estimated that up to 70 percent of CRM systems produced negative return on investment (ROI). Although Tesco and a few others have leveraged their loyalty card programs to great commercial success, most programs don’t perform as well. And some tech companies that thought they would make their fortune with business intelligence (BI) and Web analytics are being undercut by the launch of the free Google Analytics.

CIO Challenges

One challenge for CIOs and their departments will be in deciding who owns the data. The cost/ benefits of using standardised solutions is likely to massively outweigh the benefits of home-grown solutions, but there are trade-offs. If solutions are produced internally, CIOs may well find that their corporate position is further entrenched. If the solution is packaged by a company like SAP, on the other hand, then the internal owner could be the finance or marketing department.

To paraphrase scientist Niels Bohr: Forecasting is very hard, especially about the future. But five predictions that seem fairly safe include:

1.     The amount of data available will continue to grow exponentially. We are entering the Petabyte Age — where kilobytes were once stored on floppy disks, megabytes on hard disks and terabytes on disk arrays, petabytes are stored in the cloud.

2.     The amount of data that decision makers will look at will actually continue to decline because there is too much and it is not useful or accessible. Consider the exceptions: Dow Jones Index, a single number to explain the stock exchange; a credit rating agency’s simple AAA to D rating; or the net promoter score (NPS), the “one” customer satisfaction number that its developer, Fred Reichheld, believes companies should be looking at. The point is: Simple is better and less is more.

3.     Similarly, most users of information will not know about or understand the processes that are used to aggregate disparate strands of Big Data, nor will they know about or understand how Big Data is turned into simple numbers.

4.     The winners in the Big Data battle will be those whose systems become standard, and history suggests that the best systems will not necessarily be the winners.

5.     Some of the systems and data are going to be free, just as Linux, Apache and Google’s Insights, Analytics and Earth are in the public domain. These offerings make it harder to predict which aspects of the Big Data system will be profitable.

For enterprise IT departments, two key skills that will be in high demand as a result of Big Data will be the ability to add an understanding of “Why?” to the increasingly accurate picture of “What?” and the ability to simplify the complexity of Big Data. For example, businesses will need to buy or develop systems that direct them to offer this person this product at this time at this price or deal. The need to add the “Why?” element is likely to be seen as an opportunity for a wide range of providers — from anthropologists to market researchers, behavioural economists to semioticians, and social scientists to trend hunters.

Where can Big Data go next? Consider the comment by Google’s Eric Schmidt in 2007 when he forecast that Google would be able to answer such questions as, “What shall I do tomorrow?” and “What job shall I take?” Interesting possibilities indeed.

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Ray Poynter is author of The Handbook of Online and Social Media Research and Executive Vice President with Vision Critical.

This year, MIT is celebrating its 150th anniversary. That’s over a century and a half of knowledge-sharing that has lead to breakthroughs in science and engineering—innovations that have improved both social and economic welfare, year after year.

I am reposting here a version of an interview about our upcoming CIO Symposium that appears at: NEWS@MITSLOAN, Vol: XX Issue: 25 April 25, 2011

Graham Rong, SF ’06, has been the chair of the MIT CIO Symposium since 2009. Dean David Schmittlein noted that this event brings together MIT Sloan’s leading research and education with great CIOs, business leaders, and innovators from around the world. It is a platform to engage in problem-solving dialogue, gain strategic insights, and obtain solutions to improve diverse organizational and business issues for the present and well into the future.

Recently, Graham shared some of his thoughts regarding business trends, being a leader in innovation, and how his time at the MIT Sloan continues to shape his perspective.

Q. Reflecting on your experience at MIT Sloan and the CIO Symposium, what were the drivers for the past themes and topics? Were the ideas based on the economic climate or technology?

A. We have a different symposium theme every year. It is driven by industry trend-setters in global CIO leadership and corporate IT. But the common thread carried through the years is that it is always forward-looking in nature. A small group of us usually spends weeks drafting a theme based on research and reviews with thought leaders, both in academia and industry. Ideas for specific panel topics are based on the economy and tomorrow’s technologies.

For example, last year’s theme, “Top-Line Growth and Bottom-line Results,” reflected the initial stage of our economic recovery. Turning a corner means being aware of and ready for the best opportunity to glean top-line or optimal growth. A recovery period is a time of opportunities and options for fresh avenues, but one still needs to focus on the current (realistic) business operation.

Q. The subject of leadership has always been a recurring discussion topic at these symposiums. What leadership qualities did you learn through your MIT Sloan experience and what are the skills needed to lead innovation in business?

A. The academic research and entrepreneurial experience provided me with an excellent balance between technical aptitude and business acumen. At MIT Sloan, particularly in the Sloan Fellows Program in Innovation and Global Leadership, we worked side by side with a diverse group of global leaders, representing a very broad range of industries. It’s a great opportunity to discuss and share lessons learned on every possible business topic—technical, operational, and managerial. This enriched my background. It gave me an understanding that an important leadership quality is holistic thinking. This is another dimension to forward thinking, which is also a crucial attribute to being innovative. What I mean by holistic thinking is to be inclusive or comprehensive in acquiring actionable knowledge. That is, the collective intelligence I gather to make strategic decisions represents an entire body of information—insights not just from the consumers, but rather from key business influencers, including complementors, partners, buyers, suppliers, regulators, and special interest groups.

Q. As the MIT CIO Symposium is a link between academia and the global business world, how did you integrate the faculty in the development of this event?

A. We always work closely with MIT faculty. We have an academic keynote panel with five renowned MIT faculty members who share their latest research and inspire the business world. They give the business world a glimpse of pioneering efforts and future technologies. It’s a great way for the faculty to introduce peer-reviewed innovations to global executives. At the same time, the MIT faculty has an opportunity to dialogue with global CIOs and business leaders and get first-hand information on issues. Industry perspective and practices of the latest technology or business models can trigger new research ideas. As domain experts, MIT faculty members also participate in the review and judging of two of our highlights—the CIO Innovation Leadership Award and the Innovation Showcase. The showcase selects 10 outstanding companies representing cutting-edge B2B solutions that combine both value and innovation to Enterprise IT. It connects CIOs and senior IT executives with some of the most creative minds in enterprise IT. The relaxed atmosphere of this showcase allows everyone to stay in touch with the state-of-the-art thinking while networking with other IT executives. The second highlight is an award that honors CIOs who bring business value by orchestrating organizational change via the innovative use of IT and business processes. For the future, we are considering an advisory board of outstanding CIOs and business executives so that we continuously have a pulse on trends, insights, and challenges.

For more information, visit www.mitcio.com

Real-time business is more than just a good idea; speed is the new business requirement. For CIOs at CVS Caremark and P&G it's also a new opportunity to lead the business.

In our article, The Era of Now, writer Larry Lange explains, for example, how "CVS Caremark Corp., which operates 7,000+ retail stores in the United States, is culling predictive data from its customer loyalty program, which boasts more than 66 million active cardholders. This enables the company to recommend products to customers and provide them with special tailored offers based on their previous purchasing behavior. “Because of the speed of computing, we’re starting to look at stored customer data in a real-time manner to glean business analytics from that data right on the spot,” Stephen Wrenn, VP of IT, told Lange. “That way, we can provide a higher level of service and support to all customers in a much quicker time frame.”

And Dave Ubachs, CIO & Shared Services for P&G’s operations in the U.K., Ireland and Scandinavia, also explains how P&G, is “a 24x7 business, so of course, as an IT department, we need to adjust and respond to that in real time.”

To find out how other CIOs are taking advantage of real-time business tools, read the full article in the latest issue of Smart Enterprise magazine published here.