In a recent discussion with a small group of leading CIOs in Europe, they shared what they believe to be the ‘real’ top challenges for the ‘true’ CIO. You will be thinking of security, talent retention, dealing with shrinking budgets or your next SAP upgrade. But no, they think of these as tactical or operational challenges, they recognize them, they deal with them but their real challenges sit a couple of notches higher. They are not about doing something they are all about finding the right balance. Here are their top challenges:
The first challenge is really determining the depth of internally created IT versus acquired or purchased solutions. This question applies mostly to architecture as well as software, business software to be more specific. There is a general perception that if you use standard off the shelf architecture, solutions and business software (ERP, CRM, core banking, telecoms billing, etc) you could be easily copied, your competitors can follow you, you won’t have a competitive advantage or differentiation. Some organizations tend to answer this question by creating their own layers of business software.
There is no magic bullet, but the CIO is often the key player in determining when to go for custom built solutions and when to adopt and adapt standard solutions, not an easy one but surly one that needs to be answered. It is fair to say that the factors that play in making this decision would be different from an organization to another but one can consider; risk, time to market, long terms viability, ability to differentiate, cost to develop and cost to maintain as well as appetite for complex in-house projects versus exporting risk to external organizations.
The next challenge relates to the breadth of deployment of architectures and business solutions. If my organization spans multiple businesses or multiple countries, can I deploy the same systems, processes and business software? A familiar example in the Gulf is certainly family owned conglomerates, they often span from auto dealership to travel agencies, from engineering and construction to restaurant chains. Many group level CIOs appear to have consolidated their back office systems into unified architectures while allowing the business units to keep their industry specific customer facing solutions. The other half of the question relates to deploying the same architectures and solutions within the same organizations across multiple countries. The real issue is that business units or country units tend to want to feel ‘different’, surely they are, to one extent or another. But does this mean the CIO will have to run a different solution for each and every piece of the business, and if so is the business capable of funding this multitude of solutions, is the business prepared to pay the price of complexity, of integration and of poor or delayed insight? CIOs often play the key role in making such decisions, the difficulty there is that you won’t find a readymade answer and the answer that works for the next CIO won’t necessarily work for you.
Another strategic challenge is to balance technology innovations and business innovations. On the one hand the innovative applications of new technologies like big data offer organizations tremendous opportunities to break away from their competitors, for instance by gaining a much deeper insight into the preferences or behaviors of their customers. In many cases the CIO plays a major role in pushing the business to adopt such innovations in timely manner instead of waiting for the business to recognize the value of such technologies. On the other hand CIOs must also find or develop suitable technologies to support business driven innovation. For example a hotel chain that wants to avail flexible check in and check out timings instead of the age old 2pm to moon time will need its IT organization to come up with the right technology to support this business innovation. A leading business needs to take timely advantage of new technologies but it also needs its IT organization to be able to respond positively to business innovations. Only great CIOs manage strike the right balance, they know when to push the business to adopt new technologies and when to respond to business innovations with the right technologies.
Another difficult questions for CIOs is to how much to rely on mega vendors. For instance IBM and Oracle offer a broad range of integrated solutions, such pre integrated solutions help reduce technical risks, integration costs and the overall complexity for the CIO. But this comes at a price; the organization becomes increasingly dependent on one or two mega vendors and gives away a good deal of its freedom of choice. Leading CIOs may not want to lose their freedom of choice but a few only can resist excessive reliance on a small number of super vendors that tend to gain more account control every time they increase their footprint within the organization. Where is the right balance, and when to stop isn’t something you will find in any book or CIO conference. Only a CIO with great self discipline and a deep understanding of both the technology and the business strategy would be able to make this judgment call.
One last challenge is to resisting or know when to resist short team deal mentality, in this regard our small group of CIOs did not only discuss short term deal mentality in terms of long terms cost impact but also in terms of taking technology short cuts. Short term solutions can serve a purpose but may not fit within the long term architecture. Lured by the short term benefits, many CIOs tend to give in and close one eye letting their organization veer away (or just a bit) from its pre determined roadmap.
So, this was a refreshing discussion, it isn’t about operational and tactical challenges but it is a lesson strategy, vision and self discipline. It is about gaining that deep insight into the business and being able to make and defend those judgment calls.