Goodbye Outsourcing, Hello Insourcing: A Trend Rises

More IT groups are ending outsourcing deals and bringing certain work back in-house. Is this the answer to your cost, control and quality issues?

CIO, By Stephanie Overby, Thu, February 17, 2011

CIO — Looking back on the last twelve months, most outsourcing analysts agree that the level of IT services deals sealed has held relatively steady, year-over-year. The total value of outsourcing contracts signed in 2010 was $62.4 billion, according to outsourcing consultancy TPI, a figure that's pretty consistent with their last five years of total contract value data. The number of IT services deals inked in 2010 grew by six percent, according to outsourcing consultancy Everest, noting that eight of them were so-called mega-deals of $1 billion or more. About half of IT service providers polled by outsourcing consultancy EquaTerra reported growth in their business pipeline, despite expectations for a much stronger year-end close. Deal flow was uneven in the fourth quarter, EquaTerra reported, and subject to delays.

But what's most notable to David Rutchik, partner with outsourcing consultancy Pace Harmon, is not the deals that are getting done. It's the deals getting undone.

Rutchik says he has seen insourcing decisions gaining steam within the last year and expects that trend to continue to increase in 2011. "Companies are still outsourcing significant projects and transactions," he says. "But they are strategically assessing subsets of broader outsourcing relationships and determining whether to pursue a best-of-breed provider approach or take it back in-house completely."

Why to Pull the Plug

Among the reasons IT leaders cite for pulling the plug on outsourcing deals—or subsets of their contracts—are poor service quality, failure to meet business objectives, and the desired for more control over the future direction of the IT function, according to Rutchik. "Another reason is that some companies were working with more generalist outsourcing providers who had been managing areas outside their core competencies," Rutchik says. "In some cases the results were less than stellar."

Not all "backsourcing" will remain in-house ad infinitum. While some IT leaders are intent on a more permanent insourcing arrangement, others are employing insourcing "as a way to get a fresh start before pursuing a new outsourcing engagement," Rutchik says.

Some IT leaders report big savings bringing outsourcing IT back in-house. But repatriating IT services can be as complex and costly process as outsourcing them in the first place; it's not for every company or function.

For more advice on when to insource, see CIO.com's "Questions to Consider Before Insourcing Outsourced IT"

End-user computing support and network management are most likely to be successfully "backsourced" — or brought back into the corporate IT fold, Rutchik says.

While there's no lack of data on outsourcing deals each quarter—total contract value and number of deals broken down by any number of variable from corporate size to geographic location to IT function—insourcing information is virtually untracked by sourcing consultancies who may or may not be involved in corporate backsourcing decisions. Rutchik says his analysis is based on the collective activity he has seen in the industry rather than any formal research or data.

Zurich Insurance fined £2.3m over customers' data loss

BBC News, 24 August 2010 Last updated at 11:34

The UK operation of Zurich Insurance has been fined £2.27m for losing personal details of 46,000 customers, the Financial Services Authority said.

Zurich Insurance says its loss of customer
information was "unacceptable"

It is the highest fine levied on a single firm for data security failings.

Margaret Cole, the FSA's director of enforcement and financial crime, said: "Zurich UK let its customers down badly."

Stephen Lewis, chief executive of Zurich UK, said: "This incident was unacceptable."

The data on policyholders, including in some cases bank account and credit card information, went missing in August 2008.

However, Zurich did not become aware of the loss until a year later, when it then began notifying customers.

The information went missing during a routine transfer to a data storage centre in South Africa.

The FSA said in a statement: "Zurich UK failed to take reasonable care to ensure it had effective systems and controls to manage the risks relating to the security of customer data resulting from the outsourcing arrangement.

"The firm also failed to ensure that it had effective systems and controls to prevent the lost data being used for financial crime."

Margaret Cole added that Zurich "failed to oversee the outsourcing arrangement effectively and did not have full control over the data being processed by Zurich SA.

"To make matters worse, Zurich UK was oblivious to the data loss incident until a year later.

"Firms across the financial sector would do well to look at the details of this case and learn from the mistakes that Zurich UK made," she said.

Zurich said that it had no evidence the data had been misused. The firm said it had introduced new security measures, and had appointed a dedicated information security officer.

Mr Lewis said that the incident "served to remind us of the need to strive continually to improve the ways in which we seek to protect customers' data".

As Zurich agreed to settle at an early stage of the investigation the firm's fine was reduced by 30%. Without this discount the fine would have been £3.25m.

The FSA has previously fined HSBC, Nationwide and Norwich Union for data loss.

Why Can't My CIO Be More Like Me?

Bloomberg, By Susan Cramm - Jun 24, 2010

Every profession has its stereotype. Operations guys are risk adverse. Marketing types are emotional. 

Finance wonks are narrow-minded. CIOs are interpersonally awkward and out of step with the business.

Stereotypes persist because, at some level, they contain some truth. People gravitate to professions that fit their motivators and abilities. Operations guys are disciplined. Marketing types are creative. Finance wonks are detailed oriented. CIOs are systems thinkers who are fascinated by how things work.

Our differences are important and define our unique contributions. But differences are also inconvenient. And many companies are incapable of effectively managing the differences and try instead to manage out the differences.

In the last 15 years, companies have wanted CIOs to act less like CIOs and more like general business leaders. Problem is, when you try to have it all, sometimes you don't get what you really need. In thinking about what you need out of your CIO, consider the following:

The CIO job is really, really hard. Imagine trying to deliver complex products and services to technically unsophisticated and, for the most part, patently uninterested business "partners." Factor in the difficulty of ensuring security and operational stability while delivering new capabilities. Consider the difficulty of doing so while incorporating disruptive technologies and constraining funding. And do all of the above while convincing your internal team to stay focused and motivated. The CIO job is hard and it makes many good CIOs look bad.

CIOs, in their heart and soul, should love technology. You need a CIO who knows how can technology can be applied, what technology is ready for prime time, and how to make sure that it works, rather than hurts, the business. Consider AT&T's iPhone incident. The company's technical infrastructure failed to process orders and keep information secure. There are myriad possible root causes — forecasting, financing, staffing, and technical. If options were considered, risks assessed, and decisions were made that ended up being wrong, that's understandable. But if any of the executives in charge (sales, finance, operations, and IT) didn't know what they didn't know, that's inexcusable.

Great CIOs are technologists who have mastered the art of leadership. They are leaders who possess technical acumen, but also understand how to improve and grow the business, influence others, deliver results, and drive strategic change. Unfortunately, most leaders, and CIOs, are good, but not great. Research shows that only 10% of leaders possess strong capabilities across the five critical attributes: character, interpersonal skills, professional acumen, results orientation and strategy change.

If you're lucky, you'll have a great CIO. More likely, you'll have a good one. Generalists don't make good CIOs. If your company spends a lot on IT or is interested in doing something remotely interesting with technology, don't trade off technical skills for general leadership skills. It's okay that the CEO of BP isn't a drilling expert, but let's hope (for BP's sake and ours) that he has one sitting in his staff meetings. As long as your CIO is technically savvy and able to deliver results in a high integrity manner, cut her some slack and lend her a hand. Help her define how technology can drive your business. Partner with her to sell in a strategic initiative. Coach her on how to present the IT spend in a way that woos the CFO. Take the lead on driving strategic business change.

It's our differences that make us special and underlie our unique contribution. Since your CIO will never be like you, or you like him, it's much more productive to focus on perfecting the relationship and forgo trying to perfect the person.

The Politics of Cloud Apps: Beware IT Staff Unrest

CIOs and IT managers know they must address concerns like security, compliance, service levels and end-user resistance when moving to cloud-based enterprise software, but they must not overlook a critical area: the feelings of their IT staffers.

CIO.com, by Juan Carlos Perez on Mon, May 17, 2010

IDG News Service — CIOs and IT managers know they must address concerns like security, compliance, service levels and end-user resistance when moving to cloud-based enterprise software, but they must not overlook a critical area: the feelings of their IT staffers.

When companies decide to unplug on-premise servers, ditch the applications housed on them and adopt vendor-hosted software in the cloud, the IT staffers in charge of supporting and maintaining those discarded in-house systems are bound to get nervous.

High-level IT executives may have all the "i"s dotted and all the "t"s crossed in their research and planning process, but if the switch to the cloud causes ill will among their IT troops, the initiative could well be doomed, because buy-in from the IT rank and file is key.

It's the IT department's foot soldiers who will be in charge of training and supporting end users on the new cloud-based software, which often requires adjusting to an interface that is different. These staffers may also have to build links between the new and existing systems, develop customized applications and tools, monitor the cloud vendor's performance and keep tabs on end-user activities.

If IT staffers feel left out of the conversation and used as expendable pawns bound to go the way of the on-premise systems they used to maintain, their aversion to cloud-based software could spread to the organization at large.

"With a move to enterprise cloud applications, IT executives shouldn't assume that it will be any different than other technology adoption in terms of the human, cultural and political factors," said Rebecca Wettemann, a Nucleus Research analyst.

IT staffers raised concerns about job security quickly and directly at advertising and event marketing agency Momentum Worldwide as soon as they were informed the company planned to move its enterprise portal to a cloud, software-as-a-service model offered by enterprise collaboration vendor Socialtext.

"As we talked this through with the IT group, they were very concerned about: 'What are we going to do? If we're not managing as many servers, if we're not supporting infrastructure, where does that leave us?'" said Momentum Global IT Director Doug Pierce.

About eight of the IT department's 28 staffers saw their roles change when Momentum turned off its data center servers. "Our IT employees had a lot of questions. They flat-out asked: 'What does this mean for me and my job?'" Pierce said.

IT leaders better be ready to have an honest and informed conversation with their staffers. The path to success begins with explaining to them clearly the rationale for the move.

Continue Reading

Have a global change project? Start by understanding remote offices

ZDNet, By Patrick Gray, TechRepublic on April 28, 2010

Successfully implementing global change projects, whether they involve a massive worldwide software package or "soft" changes like a new process or policy, involve a unique set of challenges.

Not only are you faced with the usual gauntlets of scope, timeline and budget, but unique additions like language, culture and the "headquarters dynamic" rear their heads, derailing the most well-intentioned efforts if they are ignored. The headquarters dynamic is one of the more interesting of these challenges and represents the relationship between corporate headquarters, which generally initiates a change project, and the field offices, which are usually on the receiving end of these efforts.

Sir, yes, sir!

Traditionally, most companies implementing large-scale global projects assume a command-and-control model, with headquarters marshaling resources, setting schedules and essentially dictating orders to field offices.

You don't need an advanced degree in international relations to imagine that this usually breeds discord and resentment; field offices see the initiative as yet another grand scheme cooked up in the "ivory towers" at headquarters, with little regard to local operating, legal and resource constraints.

At best, regional offices begrudgingly comply with headquarters' fiat and promptly look for the best way to modify, work around, or altogether disregard the results of the change effort.

The opposite model is to issue what amounts to "suggestions" to local operating entities and hope that they follow through. Like the hundreds of e-mails we each receive offering advice and mild threats if some new policy or procedure is not obeyed, most of these end up promptly filed in the nearest rubbish bin.

What is needed is a model that takes into account the unique assets of field offices and leverages the operational and administrative powers of the home office as an asset rather than an overbearing administrative headache.

Understanding the remote office

Using the headquarters dynamic as an asset rather than a liability requires some understanding of the conditions in the field office.

Most field offices have less staff than headquarters and are more tightly focused on core operational activities like sales, marketing, manufacturing and logistics. Since these offices are usually established as a beachhead in an attractive market, they are generally lean and mean and focused tightly on getting the maximum results with the minimum amount of resources. As such, creative ways of doing business are often developed, and models that could benefit the company as a whole may be lying about undiscovered.

Many remote offices take pride in the success they have achieved, without the additional perceived overhead that exists at headquarters. Key to leveraging the headquarters dynamic is to acknowledge the good work frequently done in the field and seek out any best practices that can be incorporated into a global model.

In addition, rather than trying to deploy a "one-size-fits-all" solution to every global problem, consider two or three "standard" processes that accommodate a wide variety of statutory requirements, volumes of business, and varying staff levels. Usually what works at headquarters or a major regional hub is vast overkill for a local office that works in dozens of transactions rather than thousands.

The obvious way to ensure regional voices are heard is to incorporate regional personnel on the planning and deployment teams. Not only will their thoughts and field experience prove invaluable, but seeing multinational faces rather than yet another team of "drones from HQ" on the next change project will instantly instill confidence and credibility that local concerns are being aired and accounted for.

Making a friend of HQ

Perhaps the best role of headquarters in a global project is to serve as a global clearinghouse of knowledge, people and dispute resolution. Most failed global projects are rooted in a poor understanding of the headquarters dynamic, usually with the home office underestimating the complexities of field operations or simply turning a blind eye to their requirements and attempting to implement an overly complex solution in the name of "global standardization".

When headquarters is seen as having an open ear and working to transparently resolve disputes that are bound to arise in the course of a global project, the field will eventually see headquarters as a trustworthy asset to the change effort, rather than a monolith bent on implementing ill-conceived projects that get in the way of local operational activities.

For more on the role headquarters should play in a successful global change project and other tips on global projects, please download the free white paper: "Conquering the World--Delivering Globally".

Patrick Gray is the founder and president of Prevoyance Group, and author of Breakthrough IT: Supercharging Organizational Value through Technology. Prevoyance Group provides strategic IT consulting services to Fortune 500 and 1000 companies.

Microsoft Outsources IT to Infosys

The deal calls for Infosys to manage all Microsoft’s IT services worldwide, with a caveat: pay is tied to outcomes.

CIO.com, by: Beth Bacheldor in News, BLOG: Inside IT Outsourcing

I’m sure the Internet’s tongues are a-wagging. Microsoft is outsourcing all its internal IT support to Infosys. You can read about it here.

Under terms of the three-year deal, Infosys will manage the internal IT services for Microsoft worldwide, including IT help desk, desktop management, and infrastructure and application support, from multiple Infosys centers. The deal covers applications, devices, and databases in 450 Microsoft locations across 104 countries.

That’s a big deal, literally and figuratively. No one’s talking financial terms, but clearly it is a lot. (Anyone out there want to wager a guess?)

Anyway, whether you are for or against Microsoft’s decision, whether you think it’s yet another death knell for American businesses and more dramatically the American economy and way of life, Microsoft did do something right.

They tied the cost of the deal to its outcome. The financing is structured in what Infosys refers to as an “outcome-based pricing model,” meaning Infosys’ fees will be based on how successful the gig is, and how much money it manages to save Microsoft.

And it is definitely more than just a straight outsourcing deal, because it’s got all the flavor of a partnership. According to Infosys, the Indian outsourcer will establish a dedicated Service Excellence Office to help Microsoft implement ISO 20000 and ITSM Processes, and provides Infosys with an opportunity to become experts in the implementation and management of the latest Microsoft technologies. Whatever for? So it can then be more equipped to provide outsourcing services to other customers that are using Microsoft.

As Infosys’ Sanjay Jalona, VP and head of manufacturing North America, says in the press release, “This managed services agreement will further strengthen the Infosys – Microsoft partnership, and is a significant milestone in the multi-faceted relationship."

For Microsoft’s part, the software giant expects the deal “will help us enhance how we deliver end-user computing services to our internal employees and partners while leveraging the innovation and investments we make in developing new technologies,” according to Microsoft’s Jim DuBois, GM of Service Management, who is also quoted in Infosys’ press release.

By the way, Infosys had other positive (at least from its perspective) business news to share… it also reported today that revenue for the quarter ended March 31 was US $1.3 billion, up 15.6 percent from the same quarter a year ago, the company said on Tuesday. Net profit grew by 8.7 percent to $349 million (you can read about that here).

IDC: It's Time for Asia-Based CIOs to Make an IT Bet on Economy

IDC, December 21, 2009

IDC has announced the top-ten insights that highlight the key issues Asia/Pacific CIOs need to be aware of in 2010 and IDC's view of the key end-user strategies for the next year and beyond. During the last year or more, companies in Asia have mostly applied "wait-and-see" or "back-burner" IT tactics, but this will no longer work as the economy starts to turn again. In the list of insights, IDC highlights how IT is in the midst of a renaissance and the significance of this renaissance to businesses has been increased by the economic crisis.

"In 2010 companies will have to adopt a sense of urgency and be more proactive with how they will deal with an economic recovery," said Claus Mortensen, Principal for IDC Asia/Pacific Emerging Technologies Research Group. "The economic downturn has taken its toll on all lines of business in the last year and that makes it even more vital to be ready to deal with the next upswing. Companies will have to make strategic bet on when the economy will turn and plan their IT investments accordingly."

At the core of IDC's top-ten CIO insights for 2010 is the concept "dematerialization" of IT. For many companies, on-premises IT may have a serious economic flaw. The on-premises model can potentially hold IT to ransom with fixed assets that are typically underutilized and escalating in cost to support. "Dematerializing" these assets by moving them off the premises and off the books is one such alternative of overcoming this dilemma.

"This process of ‘dematerialization' is already taking place in various forms," said Claus. "We see them in the market as in cloud computing, cloud services, virtual dynamic IT, elastic infrastructure, on-demand architecture, Web-oriented architecture and software plus services--all sharing the same core element of virtualization."

IDC's 2010 top-ten CIO checklist highlights how companies can respond better and more dynamically to future market change. It also provides insights into how the choice of IT architecture can provide business technology a rapid and flexible way to revise, scale, upgrade and change BPM and workflows in minutes rather than in months.

IDC sees the top-ten issues that CIOs should be aware of as:

1. Adopting an IT Recovery Strategy;
2. Cost Reduction and the Dematerialization of IT;
3. Cloud Migration 2010;
4. Protecting Business from Disruptive Innovation and Subsequent Technology Churn;
5. Security and Identity & Access Management;
6. Cloud Multi-Tenancy is About Innovation;
7. Virtual Private and Hybrid Cloud;
8. Business Intelligence as a Service;
9. Social Enterprise Architecture; and
10. Green IT.

For more information, visit www.idc.com.

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Death by ITIL: How IT departments streamline themselves into oblivion

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Death by ITIL: How IT departments streamline themselves into oblivion

By Ilya Bogorad , Special to ZDNet Asia, Wednesday, December 23, 2009 11:03 AM

When it comes to your IT shop, don't put frameworks and methodologies ahead of objectives, an expert advises.

You may or may not know magpies. They are rather large birds from the crow family, with pretty black and white suits, who exhibit an irresistible attraction to small shiny objects, such as spoons, foil, and small mirrors. Most of the objects procured by magpies end up stashed at the bottom of their nests, neglected after the initial feat of fascination.

It strikes me that many if not most departments fall victim to the same kind of fascination, when it comes to various frameworks and methodologies du jour. CMM and CMMI, PMBoK or Prince 2, ITIL and COBiT, Agile (I cannot bring myself to listing its gazillion flavors), TQM and Lean, Six Sigma, RUP, and all that crackle and pop ad infinitum.

If you have been in this profession long enough, you know that every few years a new fad diet comes along.

Please don't get me wrong, every IT or management methodology has at least some value to it. Toyota Production System is behind one of the most efficient car manufacturers in the world. Agile, when used correctly in the right environment, helps to create product when the "big upfront design" approach is ineffective or impossible. Key PMBoK or Prince 2 concepts are a must for any project management professional.

What I do find troubling is that IT management nearly always disregards the fact that methodology is secondary to objectives. If only could they ask themselves a simple question of "What are we trying to achieve?" more often! We could achieve results more expeditiously, while avoiding unnecessary and time-consuming undertakings.

When the only tool you have is a hammer, everything starts to look like a nail. When the only answer one has to any IT management question is "ITIL", you can be sure that it's not going to end well.

A couple of years ago, one IT leader proudly told me about his department's great success with ITIL. When I asked for an example, he said: "Well, for instance, we used to close tickets without asking the user whether they can be closed. Now we always ask and users appreciate that."

If you are in charge of IT operations and cannot figure this out on your own without ITIL, you are probably in the wrong line of work.

How to paint yourself in the corner using best practices

Whenever I am engaged by an organization to advance their IT department, I often look at the current state with the following two variables in mind:

• Operational capabilities. How do internal clients rate IT service? Are outages common? Are people knowledgeable in their respective disciplines? In other words, if this were a standalone company, would they be known as rendering good service?
  
  
• Strategic awareness. Does the CIO appear engaged in the corporate strategy on par with other C-level colleagues? Is the IT department seen as a valuable asset, an inseparable vital organ of the corporate body? Does IT management and staff understand the business their organization is in? Does IT innovate incessantly, propelling their organization forward?

This approach is similar to application of the Gardner's magic quadrant, except that they use it to look at whole industry sectors and I apply it internally to IT departments.

Here are the four states I usually find organizations to be in, depending on the behavior of these two variables:

1. Morass (Ops -, Strategy -)

The quality of IT service is below par. Outages are common. Business often finds itself in a situation where the technology is seen as a limiting factor. Project management is haphazard and the rate of project failure is high.

The IT department views itself is a support function, akin to facilities management. There is often a strong "them vs. us" sentiment among the IT staffers in reference to the "rest of the business".

This state has been a common occurrence until outsourcing became a norm. If you are a new CIO entering a department like this, be warned (as you likely have been!) that you don't have decades to turn things around.

2. Growing pains (Ops -, Strategy +)

IT services are unpredictable. Outages may be common. Operations may be haphazard, with key tools missing or jury-rigged. There is a sense that "too many things are on the go".

At the same time, CIO is one of the key people within the organization. IT managers have a very good understanding of the core business. IT comes up with solutions that wow their business colleagues. There is a lineup of future projects and noteworthy ideas on a whiteboard.

This state is usually transient and is typical for startups or organizations that underwent a major surgery.

3. Reliable service provider (Ops +, Strategy -)

The department is seen as a reliable provider of IT services, no more, no less.

4. Vital asset (Ops +, Strategy +)

Excellent in what they do operationally, IT staff and management see themselves (and are seen in the same way from the outside of the IT department) as a major catalyst in propelling the company forward. Innovation is a norm and is not a mindless tinkering but a quest guided by excellent knowledge of the industry, keen business sense and the understanding of business priorities.

The CIO is one of the most respected executives within the organization. He or she reports to the CEO and is never looked at as a senior "propeller head" but as a wise decision maker, a strategist and a businessperson.

IT departments that become infatuated with ITIL and that pour enormous resources into aligning with it, will achieve, at best, the third state, reliable service provider. Often seen as the best outcome one could hope for, it is not.

These IT departments will find themselves rather more expensive than before, with new staff--IT bureaucrats--hired to monitor and enforce compliance with procedures.

At the same time, they will have established an almost arm's length relationship with the business, having documented services that they render and SLAs that come with it, much like a third-party vendor. Their service, even if it is excellent, is now a commodity.

On top of that, they will have lost their flexibility and agility, due to numerous documentation steps, signoffs and approvals--even though they are there with a good intention to protect the integrity of the vital systems.

In today's economic environment when responsible fiscal management (often, ruthless cost cutting) is a must, the only possible question that can pop in the head of a CEO in this scenario is "Can I not get a comparable service that wouldn't cost that much?"

They can and they do. Having painted themselves in the corner by following a "state of the art" methodology, many IT departments stand a good chance of becoming history.

On the other hand, those IT departments that exhibit both operational excellence and strategic awareness, find themselves completely immune to outsourcing, because they are not merely service providers, they are an indispensable part of the organization's economic engine.

What kind of IT department are you running today? What is your vision for your organization's future? How are you going to get there?

I have recently co-authored a white paper, which may outlines the vision and ideas that will help you to turn your department into a vital asset. You can download "Transformation or Travails: The imperative for IT's shift from support function to strategic asset" by clicking this link.

Ilya Bogorad is the principal of Bizvortex Consulting Group Inc, a management consulting company located in Toronto, Canada. Ilya specializes in building better IT organizations.

ERP's Paralysis Problem and the Repercussions for Businesses Everywhere

Another ERP survey, another indictment of ERP's failings to the business. But this one is costly.

CIO.com, Thomas Wailgum in News

There's a growing movement underway to rid the business world of the acronym ERP.

For real.

In fact, executives at SAP—the ones who practically invented the concept and related terminology—are among those leading the charge. (See The Future of ERP for more.)

The reason? ERP is an outdated, almost meaningless piece of IT jargon that crudely attempts to encompass all that enterprise systems have become and will be for today's and tomorrow's large, midsize and even small companies, but falls woefully short: No one does just ERP anymore.

Another reason to deep-six ERP is to ensure that there is no future association between next-generation business applications and the long-standing failings of monolithic ERP software deployments. And, of course, to put as much distance between next-gen software and ERP survey results, such as the findings from a December 2009 study conducted by IDC and sponsored by ERP vendor Agresso.

The survey, based on the ERP experience of 214 business executives across a wide variety of midsize and larger industries, found that today's ERP systems "are not providing businesses with the architectural agility necessary to support businesses adequately in today's high-change, global environment."

That's not too shocking. But what is notable about the results (and what makes them different than your garden-variety ERP study that shows sky-high TCO, or application performance problems, or unfavorable implementation odds), is that this survey actually quantifies ERP system-related failings directly to business disruption—expensive, unpleasant and career-killing business disruption.

"Survey respondents said that the inability to easily modify their ERP system deployments is disrupting their businesses by delaying product launches, slowing decision making and delaying acquisitions and other activities that ultimately cost them between $10 million and $500 million in lost opportunities," according to the survey report. (That's a substantial gulf in "lost opportunities," but we'll chalk that up to the size differences in companies surveyed.)

That related impact is costly: 21 percent of respondents reported declines in stock price; 14 percent suffered revenue losses tied to delayed product launches; and 17 percent encountered declines in customer satisfaction.

A couple of verbatim responses from respondents should make the hairs on the back of your neck stand up: "Capital expenditure priorities are shifted into IT from other high-payback projects" just to perform necessary ERP changes, noted one respondent. Said another: "Change to ERP paralyzes the entire organization in moving forward in other areas that can bring more value."

I don't have an MBA, but I'm pretty sure that paralyze is not a word you want associated with your department right now—or ever.

Today's business environment is, of course, changing much faster than most businesses can keep up with, and any type of technology that impedes the ability to adapt and be flexible is most unwelcome. Which leads to another interesting data point from the survey: ERP systems are constantly being modified, updated and, well, changed. Just 3 percent of respondents had not made changes to their ERP systems, and nearly half (43 percent) are continuously making changes as needed.

As the sun finally sets on the first decade in the new millennium, it's high time we say good night to ERP. A new day will be starting soon, and the blemished legacy and failings of ERP's nearly four-decade-long reign will be a distant memory.

Global CIO: Building A Brand Takes IT Flexibility

There are fundamental differences in how marketing and IT see their roles, and the world. And it's bad for a company's brand when the CIO and marketing execs don't get along.

InformationWeek, By Brian Gillooly, November 17, 2009 03:04 PM

When my colleague Chris Murphy recently raised the issue of IT's impact on brand, and specifically the role the CIO plays in brand development, a reader responded by calling Chris' thoughts "blindingly obvious." The reader later added, "I can't believe that there's a CIO on the planet who doesn't understand this."

Sadly, there are plenty of CIOs who don't understand this, or at least don't pay heed to it to the extent it deserves in the rapidly unfolding collaborative IT environment. It's an environment in which customers, who ultimately determine what a brand means and what value it has, are increasingly taking control of their own buying experiences through the use of collaborative technologies and social media.

Forbes CIO Mykolas Rambus talks about managing cost cutting, the changing role of the CIO, building leadership within, and his company's high priority on mining intelligence from vast amounts of data.

Chris' column prompted a call from Bruce Rogow, a good friend of mine who speaks with more CIOs than anyone I know through his "IT Odyssey," a trek Bruce makes each year across the country and during which he visits with an average of 120 CIOs and other executives. His mission is simply to better understand the role of the CIO and the impact of IT and to track changes in how IT is used and valued in the organization. Bruce told me that recently he's been making an effort to meet with both the CIO and top marketing folks at some of the firms he visits to better understand the impact of IT on the brand. It's part of a project he's working on for Don Tapscott's nGenera Insights program called "Marketing 2.0."

Bruce says that, by and large, marketing people and IT people just don't get along. That might not surprise some (especially those who think that IT people don't get along with anybody!) The reason is that there's a fundamental difference in how each group thinks about its role: While this is admittedly a generalization, IT people tend to look at things linearly and in absolutes; marketing people tend to look at things conceptually and more fluidly. The problem is, both are responsible for building, protecting, and projecting the brand, so they've got to figure out a way to communicate and work together better.

In most of Rogow's Odyssey visits, he says IT and marketing--and specifically many CIOs and CMOs--simply don't get along. In one visit, he sat with the CIO awaiting someone from marketing who never showed. In a conversation that Rogow says typifies the relationship between the two officers at many companies, the CIO told Rogow he wasn't surprised by the no-show and that he "can't stand the [CMO]." According to Rogow, a staggering 10% or less of the 150 or so CIOs he's met with in the past year described the relationship with marketing in a positive way.

But the problem doesn't lie just with marketing, or with a perception (accurate or not) that IT is a weird science that few others can hope to grasp. One part of the problem, and a very correctable one, is the need for IT to become more flexible, says Rogow. IT has to figure out a way to work differently--become more agile, assign the right people to a project, worry about nuances that they may have dismissed before, and understand they're dealing with people who sometimes don't quite know what they're asking for. As I said earlier, marketing tends to focus on a concept--unlike, say, manufacturing, which generally knows what it wants from IT.

This need for flexibility in a collaborative world as a means of building the brand is most apparent when you consider that, in their research on the Marketing 2.0 project, the nGenera Insight folks discovered that there are at least 81 distinct IT customer touch points. These include some of the obvious like order status systems, Facebook, and Twitter, as well as things like kiosks, mobile applets, and online simulations. That's a lot of links in the brand chain that have to be firing on all cylinders, and it creates quite a burden on IT moving forward. CIOs who don't get that are in for a world of hurt when a disgruntled customer decides to use some of those 81 touch points to express displeasure among equally influential customer cohorts.

Rogow says there are three primary reasons that IT has begun influencing the marketing experience, and therefore the brand, so much over the past three to five years.

First, marketing has shifted dramatically to include the customer experience, partly due to technology, and partly as result of a cultural phenomenon. The second is the number of times and ways that IT is touching the customer today (those 81 distinct touch points). And the third is how IT is delivered, which can have a profound impact on customers' perception of brand.

While Rogow claims that the assertion in Chris Murphy's column by Andy Bateman, CEO of Interbrand New York, that, in building brands, "the CIO is as important a change agent as the CMO" is a bit of hyperbole, he agrees wholeheartedly with the concept that the CIO and IT are integral to helping define the value of the brand.

So what should CIOs do? One is to work on relationships. At companies where the IT and marketing teams are doing well at brand management, the CIO has generally, over a period of time, developed a working relationship at the senior level, executive management level, and staff level, where there is now a certain amount of both trust and distinctive competence. What's critical, says Rogow, is to force what one CIO called "trust incidents" between IT and marketing, as well as between IT and the customer. Don't assume that if you have confidence in one particular area, such as building supply chain systems, that your IT teams have the skills and working relationship to automatically succeed with another area of the business, such as creating effective mobile applets for the marketing department. Keep working at it.

It also may require another look at the enterprise architecture. Some companies will hire an IT person to work in marketing, and vice versa, and assume cross-pollination will just work. But that may only be a cosmetic solution: If you have 16 order-entry systems, Rogow says, you've still got a problem because of the confusion and complexity it can create for a marketing department. "You've got to get lean" by streamlining and cutting wasteful processes and systems, he says.

Ultimately, says Rogow, where CIOs and IT teams are great at developing order-entry and inventory systems, managing PCs, and building global supply chains, one of the next major challenges for IT is to step up to support the brand, and to ensure that the company is aware of IT's role in that.

Windows 7 student upgrade hell

CNN Money, Posted by Philip Elmer-DeWitt, October 24, 2009 8:03 AM

image: Digital River

College students who took advantage of a "deal too sweet to pass up" have run into a bit of trouble.

The $29 electronic version of Windows 7 Home Edition sold for Microsoft (MSFT) through Digital River (DRIV) doesn't seem to install properly on 32-bit Vista machines.

Apparently the download files weren't properly packaged, or something, and when users tried to "unload the box" they got an error that read:

"We are unable to create or save new files in the folder in
which this application was downloaded"

A discussion thread with that title was begun on Microsoft Answers' Windows 7 install forum less than 3 hours after the new operating system launched. By Saturday morning it had generated more than 500 replies and been read nearly 44,000 times.

Microsoft acknowledged the problem Thursday evening and by Friday was reportedly offering refunds. Meanwhile, however, Microsoft technicians are pointing users to a five-step Download Squad workaround that might be enough to send students screaming to the nearest Apple Store.

Any bets on how long it will be before the incident turns up in an Apple (AAPL) Get a Mac ad?

More info on Squad workaround

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Microsoft Haunted By Windows 7 Upgrade Issue

Upgrading a Vista laptop to Windows 7

Windows 7 upgrade paralyzes some PCs with endless reboots

Microsoft: An ageing giant

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Microsoft Windows 7 Professional — $30 for Students !!

Will Windows 7 Change Our Minds About Microsoft?

IT execs urged to take MBA path to CIO's chair

By Sol E. Solomon, ZDNet Asia,Friday, August 28, 2009 06:02 PM

ICT managers eyeing chief information, technology or operating officer positions should consider an advanced degree course such as the MBA (Master of Business Administration), if they have not had formal tertiary training in business, suggests an academic.

Professor S. Viswanathan, head of IT and operations management of the Nanyang Business School at Nanyang Technological University (NTU), said courses for more experienced managers focus on strategic thinking, leadership, teamwork and inter-personal skills, rather than technical skills.

"Teaching the state of art in technology, and current strategic and business issues is important. However, because the technology and business context changes rapidly in today's world, it is important to impart broad problem solving, analytical, teamwork, interpersonal and conceptual thinking skills that can help the students over a lifelong career," Viswanathan told ZDNet Asia in an e-mail.

"While an MBA degree is not essential for executives to climb up the corporate ladder, other things being equal, having one is always an advantage," he said. "Besides, the frameworks, concepts, strategic thinking and business vocabulary that one learns in an MBA program is very useful in senior management positions."

For instance, practice assistant professor Michelle Cheong noted that the banking industry is currently looking to strengthen its internal processes and operations. To support this focus, there is growing demand in the sector for technology and operations professionals who understand the banking industry, said Cheong, who is director of Masters and professional programmes at the School of Information Systems, under Singapore Management University (SMU).

The university's Master of IT in Business (Financial Services) program is co-designed and co-delivered with business and IT leaders, she said in an e-mail interview, which helps capture "a successful blend of managerial and practical skills and know-how". It trains professionals to transition into leadership roles, such as head of technology and operations, she added.

The course focuses on the banking industry's specific needs for technology, process and operations professionals in four major segments: capital markets and investment banking, corporate and institutional banking, private banking, and retail banking.

The NTU also offers an MBA course with specialization in technology, and is designed for participants with two to 10 years of work experience, Viswanathan said.

The school also runs its Advanced Management Program (AMP) and Executive MBA (EMBA) for general managers or heads in their respective functional domains. At this level, strategic thinking and leadership are more critical so even functional domain courses will have strong strategic orientation, he said.

At the undergraduate level, the NTU offers a double-degree in Computer Engineering and Business, as well as the Bachelor of Business (Bbus) program with IT specialization. The Bbus (IT) students learn business management subjects and will receive a business degree, but they also attend elective courses in business IT such as enterprise systems and IT in financial services.

Viswanathan said: "Typically, most IT jobs in large organizations require a good understanding of the business processes in a particular functional area. The Bbus (IT) and double-degree holders are effectively able to communicate well with the user--that is, business managers--as well as with the technical staff in the IT organization."