I recently attended an interesting CIO Panel at the Churchill Club [1] in San Francisco. It was a Blue Ribbon panel with CIOs from Bechtel Group - Thor Geir Ramleth, Intel - John Johnson, McKesson - Randall Spratt, and Yahoo - Lars Rabbe. The Moderator was Dave Margulius and the title of the panel was Building the New IT. Attached are some of the insights that the panelists provided. 

Major Changes for IT in 2006

IT is shifting out of the utility role toward a business perspective. It is a service oriented business aligned with the business units, making the workflow more efficient.  This means a business focused approach to IT and less around technology.  Technology matters but the application of technology to business is what really matters. For Johnson, Spratt, and Rabbe, this meant more focus on the consumer space. Ramleth said that applications must be more intuitive. "You don't need a manual to use Yahoo, but you do need a manual to use SAP."

It Budgets for 2006

Not surprising, most budgets were flat. Yahoo was the only one who had an increase in budget since it is a growth company. Mr Spratt said that instead of asking IT about budgets, which is the measurement for cost centers, IT should be asked about Rev/Profit like a business unit. IT is being measured on unit cost which can be tied to profit. IT must be rationalized with revenue.   

Outsourcing

Intel looks to outsourcing as an option. All the others felt they could find better costs inside rather than outside.

Product involvement

IT is getting pulled into the product planning cycle doing more proof of concepts. IT brings the relevance of support, usability and maintainability to the Product. The cobbler's kids are being asked to try on the shoes first. 

Vendor Management

Spratt said that the biggest problem is “ankle biting” where the vendors go directly to the individual business units and establish themselves as ad hoc solutions that need to be rationalized with IT at some later date. Rather than build fences against vendors, companies like McKesson are opening up their strategic planning to the vendors. Invite the vendors in and give them the strategic vision so that they can align with corporate IT, and market from the top rather than low level penetration. 

Consolidation and Vendor Lock in

All these companies agreed that consolidation was important to be more cost effective and agile. They were not concerned with vendor lock in. Rabbe felt that the bigger footprint a vendor had, the more leverage the CIO had with the vendor, making it easier to manage them. 

Software Licensing

While consolidation was a benefit, vendors need to make their licensing easier and more adaptive to changing business needs.

Virtualization

Was a key interest for everyone, as a way to increase utilization, and provide more flexibility and agility. Virtualization of the infrastructure helps to drive down costs. The next step in virtualization is virtualized environments. Where you can swap out a compliance environment for instance and then bring it back later when it is needed.

Security

Was not mentioned during the panel but was brought up in the Q&A. The response was that security is table stakes, but not singled out as a high priority.

These are just some of the thoughts that I captured. Do you agree with the panel?
Is the role of IT changing?
Should vendor lock in be a concern?
Would your company share their IT vision with vendors to get better alignment from them?
Is virtualization a key enabler for the new IT?

Please send me your thoughts.

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