Insight No.41 : Sep 2012 : Just what the Doctor Ordered: Portfolio Management in HealthcareThe State of the CIO Today: An Interview with Nick KirklandBy Dian Schaffhauser

Nick Kirkland marvels at how willing chief information officers are to share their experiences - "warts and all" - with other CIOs. Frequently, he says, a CIO in one company is just a "few months farther down the road" with an initiative that the others are just starting. Providing an environment for that interaction to take place is what drives CIO Connect, the company that Kirkland runs.

CIO Connect has three missions: to help chief information officers and other IT leaders across all sectors, "make great decisions, make powerful connections, and keep them in the know in what is a very fast moving area." An advisory service provides CIOs and other experts who can come into an organization as an extension of the IT team and brings CIOs together in small group settings or via online access to share their lessons learned.

Annually, the organization puts on the CIO Connect Annual Conference, which takes place this year on October 2 and 3 in London. Recently, Pcubed talked with Kirkland about the challenges CIOs currently face in dealing with a continued downturn and how technology leaders should handle the latest crop of IT trends.

The theme of your upcoming event is "Embrace the Unexpected." Where did that come from?

Nick Kirkland: After any recession, it's rare that value and growth comes from the same place where it left off before the downturn. So we're encouraging people to look at the unexpected and see what they need to do in order to help their organization's growth.

Four years into the downturn, we have a lot of experience with not having enough of anything.

If you look at some of the long-term trends, you see that CIOs have had less real money to spend for some time. That's not only a function of the downturn and the economy; it's a function of the constant focus on IT costs - even though IT costs get absorbed into the CIO's budgets when they take over the operations that have saved the organization money.

Being able to report on those things in an effective way is always very, very important. But I think embracing the unexpected leads you down routes of saying, "Are we controlling the right things? They may have been the right things to control previously, but are they still the right things that we're controlling? And are there new things that we should be embracing that weren't there before?"

Clearly social media is one of those new things. Working with the chief marketing officer on these things is an opportunity that just wasn't there five or six years ago. In that way, you could also say bringing your own devices into work is an opportunity to release the focus on controlling and locking down a corporate desktop, in order to take advantage of some of these other things that are going on.

It seems like the CIO has to become more comfortable now with letting go of all the master controls.

That's exactly right. But I think one of the important things for a CIO to be able to do these days is to be able to look across the whole of their business and to see where it's appropriate to lock down and control and where it's appropriate not to. So you might, for example, see somebody in a call center - you don't always need to see creativity in that place. You perhaps want a script to be followed and a service just to work. When you get then to parts of the corporation where they're looking at company data or client data or whatever it happens to be, you probably want to apply some of the new tools. You need to do that in a way that allows the CIO to incorporate some of the things that become repeatable once they've been discovered into the corporate background. Therefore, it's an ever-changing thing - that ability to segment and to recognize where things can be done differently, indeed, where they must be done differently, that's pretty important to help the business.

Since the downturn have you seen an evolution in what the CIO has to undertake?

To some extent. I think it's probably more about maturing and expectations around the end-users than anything else. The downturn simply puts a sharper focus on the CIOs' budget. You need to be able to play the corporate game and show that you're running a lean ship - not wasting money on your own internal department and you're doing the right things.

Also, you need to be able to show that some of the costs that you're incurring under your budget are a result of the continuous and on-going savings that the business is making from previous systems and services that were implemented. Having a good handle on those sorts of business issues is important. And it becomes more so when money's tight.

Looking forward, that's not going to change even if the economy starts to pick up - no matter where you are in the world. Look at Singapore; it's still dropped down three or four percentage points in growth terms - there's still less growth than there was. When you look at that, the CFO isn't going to relax their control of the purse strings, even if growth starts to return in the way we experienced it before, because there'll be the replenishments at the corporate treasury. That efficient use of money is an ongoing theme and that's going to be with us for a couple of years.

What's the biggest challenge that people are telling you they're currently facing? Is it all around the cost aspects?

A lot of it is. I would phrase it perhaps ever more positive insofar as the biggest challenge is meeting demand. The demand is still there, but the resources to meet that demand may be a bit stretched. And you could put it in a slightly different context as well - the balance of funding between change and ongoing operations - where people can spend a little bit of money on the exciting stuff versus keeping the lights on and spending less overall.

I think it was Tom Peters who said nothing innovative ever came out of a fully funded department. People start to do some clever things when they get the opportunity - indeed, when need drives that.

Let's talk about one of the industries that has been hardest hit - financial services. That's where the turmoil has probably been the greatest in the last four years. So are you seeing amazing things happening among your CIOs in that segment?

I wouldn't say I see amazing things. In the city of London we find there is a certain amount of money being spent on preparing systems for what is expected to be the next round of regulations separating retail banking from some of the more risky areas. So there is separation of systems being put in place either because there are going to be internal changes or because there will be regulatory expectations that organizations separate in some way.

In the UK, a lot of financial services companies selling through direct sales forces have to accommodate what is known as the retail distribution review or RDR, which is essentially moving away from a commission-based sales process to a fee-based sales process. That's giving them an awful lot of internal process change as well as systems changes to accommodate, because they'll have to continue running with older products that are still paying commission until such time when they need changes made to those, when that's no longer allowed. That's a pretty darned big shift.

Meanwhile, some of the organizations - perhaps those selling household insurance - see that they are performing well anyway, that people have a demand for their products, that the savings ratio is increasing slightly, as people try to pay off debt and put a little bit aside for the rainy days, which have already arrived. There's a range of things just within financial services that is driving things. One of the elements is undoubtedly an increase in self-service that financial services institutions can give to their customers.

These involve both system and process change. How much is the CIO getting involved in the process part of the equation?

It varies, but CIOs are getting involved a lot because that's the source of value. I think the days where CIOs would create systems, deliver it as far as the glass on the desk, and then run away are long, long gone. You look at the totality of the change that is necessary to get the cost savings.

What about getting closer to the customers? Are they spending more time doing that?

I was having a conversation earlier this morning with one of our speakers for the conference, who will be presenting on the subject, and his view was that there's a lot of talk about it but it's not necessarily backed up by as much action as there should be. The very best CIOs do that. Some of the people we work with when they change jobs go to spend time with the frontline people looking at and understanding the sorts of things that they need to do internally and for customers.

There's a lot of opportunity to take cost out when you work with your suppliers and your customers and start to do supply chain management initiatives that take cost out. In many, many cases cost arises where two organizations are doing the same thing, but to find those areas you have to look at it from different angles - the supply and demand sides of things. If you can build trust and systems that verify that trust, then you can take cost out. That's why it's so important to work closely with customers. Not everyone we know is spending a lot of time on that, but the very best do undoubtedly look at that very seriously.

Let's talk about some of the trending topics that surface over and over again right now for CIOs - big data, social media, consumerization of IT. How do you recommend CIOs approach them?

First, the only thing that matters is what's necessary for the business. If you don't believe your business can benefit from some big wave or hype that's coming along, then don't get involved in it. Understand it. Take time to talk with your colleagues about how it may help. Maybe start some kind of pilot. But don't pile everything into it just because it's the next greatest thing coming along.

With big data the on-going problems are finding the tools that allow you to analyze it, struggling in many cases to have one view of the data, and [gaining] a clear integration of all the various systems, allowing that common view of reporting. When you get to that point, you need to make sure the intelligence that's emerging from this system becomes available to the people who need it. So take it steadily and look at what you might think of as the staple, standard things such as where the business benefit is coming from, what the return on investment is, and don't get carried away by the hype.

And that leads me on to that segmentation piece again. As we talk about consumerization of IT and everybody having their different device in the call center - no, I don't think so. But in the corporate office where people are doing some of that analytical stuff, then absolutely.

Let people try these things. Let them get to the point where there's something useful, replicable, and repeatable, and then incorporate it into the way that the corporate systems work. And where you could get benefit from cost savings - in something like cloud services - it's very much hyped, but there are real gains that are available in certain areas at the right time.

People are also looking at consumerization in a slightly different way from just bring-your-own-device, saying what device does our consumer have in their hand? If it's an iPhone, can we interact with them in a particular way?

We've seen some interesting examples of that, where there's an almost unexpected return. A housing association in the UK, for example. There was a very high propensity with this particular organization for [the renters] to have smart phones of every sort of flavor! So what they did was create a range of apps that reminded people when their rent was due and did other services. They discovered there was a real return on that because people weren't forgetting. Instinctively, sitting in the ivory tower, you'd think that people who were perhaps struggling to find their rent wouldn't be spending an awful lot of money on a smart phone. It turned out they were. So what devices does your customer have in their hand, and how can you interact with them?

I would add to your list of three by saying that if you look at big ERP systems at the moment, there's starting to be a discussion about whether those systems are as customer-focused as they need to be. You don't want your business to have to change its processes only because a giant software company has changed its software.

If we start to decompose some of these big, monolithic systems more into apps that can be aggregated to get jobs done in a particular way, you start having interesting things happen. In a way, it's only another wave of the same thing that people started to do with web technology 10 years ago, when companies like British Airways started to create customer-centric applications for their customers on the web, only to discover that they were better than the internal applications that they'd created for their people. We're just doing that again with another generation of devices in some respects.

People are just starting to talk about what the post-ERP world might look like. Meanwhile the ERP providers, of course, are starting to say, "What do we need to do to put things on the appropriate device to allow people to be able to link into?" There are interesting things going on with retailers, where there's an app where you can scan bar codes in stores to get more information about the product. I was doing that myself not so long ago; my wife was saying to me, "Why are you trying to do that and read it on a tiny little screen when there's a nice leaflet beside it?' And my answer at the moment was, "Because I can!'

If a retailer starts to give you some benefit of doing that, they also get the benefit of tracking you in a sense. They know which aisle you're in, and they can send to you some sort of offer that says, "Turn around. There's something that you've shown an interest in on our website before, and there's a special offer for you if you show this code, which shows up on your smart phone, at the checkout desk.'

We're just scratching the surface with this stuff at the moment, but that personalization coupled with the value of the technology that's in somebody's hands starts to get really quite interesting.

Since we're talking about forward-looking things, what do you think 2013's going to bring?

I tend to be somebody who doesn't get overly excited about year-end boundaries for the sake of it I would downplay that anything significant will happen in the short-term into 2013. I think we will probably still have more of the same, a little more cloud-type services becoming available but there will still be the same hype around it. We'll still have desktop virtualization going on. We'll have more organizations thinking about where they can put bring-your-own-device into play if that makes sense for them.

We'll see a little bit more of generation Y coming into the workplace. The expectation's always been that they want to work for companies that they can believe in; and they're not going to want to let go of the many devices they've grown up with. We'll see. I suspect that, just like my generation, when you start to get a paycheck, it starts to diminish some of the principles that were so important to you when you were at university. We'll see a little bit more of that as 2013 evolves because people coming out of college now, 20- or 21-year-olds, were born in the early 90s. There's always been some sort of Internet around by the time they could start to read.

I wouldn't expect great economic change. We're not going to suddenly find all this massive growth coming from all sorts of interesting areas. We'll still be in that do-more-with-less sort of environment until growth does start to emerge.

Next month, Nick shares the characteristics of the superstar CIO - and how to become one yourself.

Contact Nick Kirkland at Nick.Kirkland@cio-connect.com. Learn more about CIO Connect at http://www.cio-connect.com/.