How to be a more effective CIO

Transcription

People, technology, upgrades, status quo vs. potential gains: this series of articles ranges across many areas
of interest to chief information officers, asking questions and providing answers. We present them as part of
our continuing effort to provide CIO’s not only with technology tools to do their work better but also with some
of the best thinking about matters of daily concern. Article contributors are consultants and educators who
have spent years in the trenches as well, building out their own knowledge and skill base in the process of
executing effective I.T. initiatives. Learn more about assessing technology risk and what to do about it; how to
select and motivate technical staff for maximum effectiveness; how to make better decisions; when to upgrade/
replace your technology … or not; how to leverage your own hands-on experience to elevate your executive
performance. Take these expert observations and opinions, add your own, and thrive ….
Page 1
Calculating Technology Risk: How Much Can You Afford
Page 6
Why Some CIOs are Ten Times More Effective than Others
If you can calculate risk mathematically in sensitive fields such as insurance, credit and financial
transactions, why not the risk associated with installation and use of technology? Educator and
consultant Dr. CJ Rhoades reviews the broad field of risk assessment, examines examples of
successes and failures, and proposes a comprehensive project management plan.
Consultant Harry Joiner writes on the leveraging and appreciation of “human capital,” focusing
on means and metrics to encourage employees’ personal and professional growth as key factors
in assuring excellence in departmental achievement and the accomplishment of the broader
corporate mission. He presents guidelines for keeping employees motivated and which also
support executives’ own “professional net worth.”
Page 14
CIO Corner: Decisions, Decisions
Page 18
Five Secrets to Keeping up with Technology
Page 21
The Hidden ROI of Training
Page 24
Five Things CIOs Often Forget
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The CIO’s decision process is complex, made more so in that, usually, he/she must deal with IT
people who don’t understand business and business people who don’t understand information
technology. Ideally, the decision derives from the organization’s value proposition, assuming it
has one, says consultant Harry Joiner. He poses strategic questions for CIOs to consider which,
each in its own way, illustrates the need fo, and value of, scenario planning.
With corporate success increasingly impacted by the continued advance of information
technology, CIOs are always under pressure to “get it right.” Educator-consultant CJ Rhoades
identifies the pressures for change and the factors that hazard the process. Presenting a fivepoint roadmap for CIOs, she also counsels that they not to afraid to stick with what they have;
that just going for the latest is not necessarily a good strategy….
Companies spend billions of dollars on training every year, unaware that they can spend far less
if they qualify for some of the more than $1 billion dispensed annually through state and Federal
programs. Consultant Peter Green discusses types of programs that are available and how
they work, examples of training sources, and how companies can begin taking advantage of the
opportunities presented.
The transition from staff to leadership can be a perilous crossing, but the danger can be alleviated
if a leader taps into experience and knowledge he/she accrued prior to becoming the boss when
it’s needed, says educator and consultant CJ Rhodes. She cites five things IT leaders often
forget as they immerse themselves in the high-level issues, contending that bringing such things
into decision-making can help avoid pitfalls.
Calculating Technology Risk:How Much Can You Afford?
Calculating Technology Risk:
How Much Can You Afford?
By CJ Rhoads
Editor’s Note:
What are the risk factors of your
next technology project? Can
it be determined like insurance
ratings or credit scores? Maybe
so, according to CJ Rhoads’
calculations. As the technology
world grows at an enormous
pace, more and more of the
factors that determine a project’s
success (or impending doom) are
revealed. Before you spend your
first dollar on your next project,
why not see if the numbers add
up with CJ’s formula?
Talking About Risk
The word “risk” can strike fear in the heart of the most stoic leader. Katrina, 9/11, floods, fire; this
is what often comes to mind when someone mentions the word “risk”. But risk can mean much
more than disaster: failed business strategy, unexpected competition, hacker-attacks, information
technology that doesn’t work, customers who don’t pay. Many things can disrupt business and
cause failure.
Consider all of the thousands of ways we might lose business. The thought is enough to send us
scurrying to bury our head in the sand.
Or maybe the opposite happens: we spend a great deal of time, resources, and money trying
to prepare for every disaster we can think of – only to waste the resources (because what we
expected doesn’t happen) or worse – we prepare for the wrong disaster and get blindsided by the
unexpected.
The emotional reaction can be overwhelming. One of my clients, a manufacturer of those little
brown prescription bottles you used to get at the pharmacy, reacted strongly to 9/11. Within three
months he had built a redundant data center – duplicating every server, every mainframe, every
desktop. He spent millions – a huge chunk out of his 50 million dollar operating budget. When it
was completed, he felt very secure that his existing business would continue even in the face of a
disaster that shut down his information technology.
Unfortunately for him, his competitor spent very little on a redundant data center. Instead, the
other company spent the year investing in research and development to create a new type of
drug container – one that could stand up to the rigors of the postal mail service. With so many
insurance companies requiring mail-order prescriptions, the manufacturing technology proved a
better investment than the disaster recovery technology.
The bottom line is that we want to minimize risk, but we have to draw the line. We shouldn’t
spend so much to minimize the risks of each battle that we lose the war.
We shouldn’t
spend so much to
minimize the risks
of each battle that
we lose the war.
Past Attempts to Quantify
We can find dozens of “calculations” from data security companies that tell us how much we
should be spending to safeguard our systems. Since they are selling the service and would
benefit by our spending more with them, we probably shouldn’t rely upon their calculations.
Some independent researchers have attempted to provide some overview calculations.
The National Bureau of Standards published a Federal Information Processing Standard (FIPS
#65), a Guideline for Automatic Data Processing Risk Analysis in 1979 that calculated a metric for
measuring computer-related risks: Annual Loss Expectancy (ALE).
where :
Oi Set of Harmful Outcomes
I(Oi ) Impact of Outcome i in dollars
F
Frequency of Outcome i
JDEtips © 2007 Klee Associates, Inc.
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Of course, that sounds a lot more complex than it actually is; most people just say that ALE is the
rate of loss times the value of the loss. This calculation is a lot more accurate when assessing
the risk of a hurricane than it is in assessing the loss of a system due to a denial of service attack
or poor project management. It isn’t normally used by itself, but there is a host of economists
who use this calculation to put a limit on how much a company should spend on security. CERT
(Carnegie Emergency Response Team, a well-known security research group) notes that security
costs have diminishing returns. They recommend that we should spend the least amount that we
can on it without drastically increasing the risk.
COBIT (Control Objectives for Information Technology) is described in a 209 page publication
by the IT Governance Institute and provides a comprehensive list of hundreds of key metrics to
assess the amount of control and risk for all IT processes.
Edwin Covert and Fran Nielsen, in Measuring Risk Using Existing Frameworks, developed
a framework for measuring risk that assesses a weighted score in three areas: System
Architecture, Network Interface, and System Life Cycle.
The problem with all of these methods is that they can assess an organization, but cannot predict
the risk of success or failure for any particular project.
It occurred to me
as I read about
Nike, Hershey, HP,
and the FBI that
any experienced
project manager
could smell those
failures a mile
away as well.
The Department of Defense maintains a procedure called DITSCAP (DoD Information Technology
Security Certification and Accreditation Process), which carries out a series of tasks to maximize
security and minimize risks of each system developed or implemented. The assumption is that all
projects follow the procedure, and therefore will be risk free and secure. It is not a measurement,
but rather a process.
This still leaves us without a really good answer for calculating the risk of any particular project.
One attempt was called RAM (Risk Assessment Model), which is a software program developed
to ask 50 questions regarding the strategic, financial, technology, project-management, change
management, and operational risks about any particular project. It must not have been that
helpful, however, because the software is no longer in use.
So there hasn’t been very much progress on mathematically quantifying the risk of any particular
project. Decision makers today seem to have a real problem predicting the future success of a
project. I have only to name a few recent examples. The FBI’s $170 million dollar case file project
self-imploded, wasting taxpayer resources and setting the government intelligence capabilities
back four years. Nike, Hershey, even technology giant Hewlett-Packard have all spent millions on
projects that not only failed, but lost money for the business.
One of the financial firms I worked for tried to implement an on-line banking system and spent
over 30 million dollars on it. They also tried to move a credit application from a mainframe in
Wilmington, Delaware, to a mainframe in Arizona. They also tried to implement company-wide
project management software. In all of these projects, I predicted failure; with the mainframe
move and project management software, it was long before the first million was spent. With the
on-line banking system, I could easily see the cause of failure when I conducted the root cause
analysis. It occurred to me as I read about Nike, Hershey, HP and the FBI that any experienced
project manager could smell those failures a mile away as well.
The terrible truth is that all of these disastrous projects could easily have been avoided. The
factors that lead to project success are under intense scrutiny in the research and are well known
(to the researchers and consultants at least – though perhaps not to the decision makers as
the litany of public project failures continues to be heard). A compilation of these factors, from a
variety of sources, is listed in Figure 1.
More practically, we then use these factors of success in a formula that could predict whether any
particular project will be successful prior to the project starting.
Mathematical Calculation?
“How on earth,” you might muse, “can you mathematically calculate the risk as to whether
a project will end in disaster or successfully bring about expected benefits?”
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It may seem like an impossible task.
The same might have been said in 1759 to Jonathan Dickinson and Gilbert Tennent as
they established the Corporation for Relief of Poor and Distressed Widows and Children of
Presbyterian Ministers, the first life insurance company. Today, actuarial tables are an established
way to calculate how long a person will live. Fifty years ago, one might have said the same thing
to engineer Bill Fair and mathematician Earl Isaac in trying to dissuade them from investing $400
(each) in a new company, Fair Isaac, which would mathematically calculate the likelihood that
any individual person would pay back a loan. Yet the FICO credit rating score is calculated and
published on billions of people and used by millions of companies every day.
While the detailed mathematical calculation for your credit rating is a proprietary secret of the Fair
Isaac company, a simplification of the equation could be described as:
35Payment History +15Length of Credit History + 10New Credit + 10Types of Credit Used
+ 30Amounts Owed = Credit Risk Index (FICO score)
Like the FICO score, the risk of any particular technology project can be calculated by identifying
the primary factors that influence project success. Similarly, we can build a mathematical model
that would enable any business executive or owner to calculate the risk of a technology project
much like actuarial tables calculate the risk that someone will die or the FICO score identifies
the risk of someone going broke. Of course – we have years of data behind the tables for life
expectancy and for credit risks. We don’t (yet) have the necessary volume of data regarding
project factors and success. As noted earlier, though, we do have a pretty good idea of which
factors contribute to the success or failure of a project, as listed in Figure 1.
Weight Factor Symbol
10 focused goal(s) Fg
10 small milestones Sm
10 training & support– before, during, after Tr
10 proper planning Pp
10 business process redesign & stable technology Bpr
8
user involvement Ur
8
executive support Es
8
clear business objectives Cbo
6
experienced project manager Epm
6
firm basic requirements Fbr
4
competent staff Cs
3
clear ownership Ow
3
decentralized decision-making Ddm
2
business continuity/disaster recovery plan Oth
Figure 1 – Factors of Information Technology Project Success
However – missing startup data shouldn’t prevent us from starting with the factors that research
has shown influence whether a project succeeds spectacularly or fails miserably.
Then, over time, as the calculation compares to the reality of actual success or failure, the
factors and weightings can be adjusted to become more and more accurate. We could call this
mathematical model the Benefit/Disaster Risk Index (BDRI). Using the symbols in the third
column of the Factors of Information Technology Project Success table, the equation might look
like the following:
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10Fg +10Sm + 10Tr + 10Pp +10Bpr + 8Ur + 8Es + 8Cbo + 6 Epm + 6 Fbr + 4 Cs + 3Ow +
3Ddm + 2Oth = BDRI
It is important to reiterate that these factors and weightings are only a starting point that must
be confirmed or invalidated through research and time, just as the original FICO equation had
different weightings and factors when it was first proposed in 1953. These particular factors were
chosen due to their appearance in several meta-analysis and synthesis studies. In the meantime,
however, we can at least get started on utilizing the factors that research has determined make a
difference and review our own projects for whether they contain these factors. On a scale of 1 to
7 where 1 is strongly disagree and 7 is strongly agree, the decision maker can create and assess
questions relating to each factor for each project.
Let’s test the index on a fictitious project to illustrate how this may work. The DEFG Corporation,
a mid-sized company, is looking to implement a new piece of software that would make the
Accounting department’s job easier, if only they could get the team on board. The management
and end-users are all reluctant, as it means changing how they do business now—and they’ve
got that down pat. The IT project manager is new and has burned a few bridges already trying to
do too much, too aggressively, without first interviewing the end-users to see what their needs are
or getting key buy-in. But there is a very detailed plan created by the project manager, including
focused goals, intensive training, business continuity, and the cost in total should be less than
$750,000. Let’s take a look at Figure 2.
Score Question Weight Score X Weight
7 Fg 7 Sm The goal(s) for this project are highly focused. 10 70
The milestones are small (less than $750,000 in effort each). 10 70
6 Tr The users will have extensive training and support before, 10 60
during, and after implementation.
4 Pp This project is being properly planned, including risks and 10 40
contingencies.
3 Bpr The business process aligning to the technology in this project 10 30
is being redesigned. The technology itself is stasble and
implemented elsewhere.
1 Ur The users are extensively involved in the requirements and 8
8
evaluation of options for this project.
1 Es The executives strongly support this project. 8
8
6 Cbo This project leads to clear business objectives. 8
48
2 Epm This project is being led by an experienced project manager. 6
12
7 Fbr This projectʼs basic requirements are firm. 6
42
5 Cs The staff working on this project is competent. 4
20
2 Ow The department paying for this project has clear ownership over 3
6
the results.
2 Ddm This project supports or enables decentralized decision-making. 3
6
7 Oth There is a business continuity/disaster recovery plan in place 2
14
Figure 2 – Sample Scored Project
The total BDRI score for this project would be: 434.
A project that scores a 600 or above will undoubtedly succeed, while a project that scores less
than 300 will undoubtedly fail. In this scenario, the score indicates that some factors need to
be considerably improved before this project kicks off – most specifically more buy-in from key
managements and end-users, as well as ownership of the project by the department that will be
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using it, Accounting. Even the most innovative and beneficial projects can fail without support all
around.
Apply this to a few of your projects.
What are the benefit/disaster risk indexes? If you answer that you can’t afford to ensure
agreement for all of these factors for every project, then I suppose I would ask; how much can
you afford to spend on failures?
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Why Some CIOs Are Ten Times More Effective Than Others
Why Some CIOs Are Ten Times More
Effective Than Others
By Harry Joiner, Reliable Growth
I’m very fortunate in that both my father and my father-in-law were successful businessmen.
Editor’s Note:
Harry’s take on how CIOs can
stand out from the pack is the
culmination of his thinking about
how to integrate tangible, bottomline results with the “intangibles”
of people-driven leadership.
In 1972, my father co-founded an international food trading company that last year was the
second largest exporter of US poultry—just behind Tyson Foods. At $400 million in annual sales,
his company ships 11,000 truckloads of frozen food to 110 countries each year. And they don’t
kill anything. With offices around the world, all they do is buy, finance, sell, and ship product.
In 30 years, my father and his partner have built an organization where the people, processes,
infrastructure, and compensation systems form a self-reinforcing loop of recurring profitability.
Equally successful was my father-in-law—who never went to college, yet rose through the ranks
of Citibank to become the CEO of a multi-billion dollar real estate investment subsidiary of a
Fortune 20 insurance company. At the pinnacle of his career, he presided over a 450-person
organization packed with Ivy League MBAs.
By any measure, both men are at least ten times more effective than the average
businessperson. How did they do it? Each man has tremendous drive, excellent clarity of thought,
a results-driven personality, and managerial courage. But there’s something else. They have the
“X factor”— a secret ingredient that allows the direct reports of an Executive to believe in the
Executive due to the Executive’s magnetism and selfconfidence. It’s what I call the Great Enabler
because it enables managers to accomplish their objectives through other people.
When I think of my father-inlaw, sometimes I wonder what motivated Citibank to hire him in
the first place. No college degree. No abundance of relevant work experience. Sure, he had
some technical knowledge of real estate, but nothing that truly distinguished him from the other
applicants. But he had the “X factor” in large enough quantities to be easily recognized in an
interview. And the hiring manager wasn’t afraid to surround himself with young lions. That was
lucky. For Citibank, that is.
What’s the secret
of wealth?
Without hesitation,
both said
“Leverage and
Appreciation.”
Recently I asked these guys “What’s the secret of wealth?” Without hesitation, both said
“Leverage and Appreciation”. In the real estate and financial markets, that means buying an asset
that costs $100 with a 10% down payment. That’s leverage. Then if the asset value increases by
10% to $110, the investor’s cashon-cash return would be 100%. That’s appreciation. If you do
enough of those deals with enough money, sooner or later you’re rich.
Great, you say. What do leverage and appreciation have to do with information technology? Since
this article promised to tell you why some CIOs are ten times more effective than others, I’d like
to apply these concepts to the management of human capital—your company’s most underleveraged asset.
Leveraging Human Capital
As it applies to the management of human capital, “leverage” means being able to increase your
own capacity by delegating to reliable, high-capacity individuals who know how to effectively
execute to the letter and spirit of the assigned task. This assumes that you know what, when, and
how to delegate, and that you have a sufficient number of loyal delegates to whom to delegate.
It’s also incumbent upon you to arrange your team in a way to maximize efficiencies and
opportunities for synergy.
Human Capital Appreciation
As it applies to the management of human capital, “appreciation” means having leverageable
delegates whose talents improve with time. Simply put, good hires improve with age and
appreciate in value.
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Now more than ever, CIOs lack the time to micromanage underperformers. The rate of
technological and competitive change both inside and outside their companies dictates that the
CIO’s direct reports must be able to not only deal with change, but also anticipate it. Accordingly,
CIOs need scalable direct reports who are good now and will become even better over time.
What is “Scalable”? Scalability determines the extent to which you can build a world-class
organization around a given employee. It’s what separates the “A players” from everyone else. A
company loaded with scalable A players is “Stockholder Nirvana”.
Now more than
ever, CIOs lack
the time to
micromanage
under performers.
The Three Dimensional Career
I have always believed that every worker’s skill set is threedimensional: All workers must have
technical expertise; industryspecific expertise; and companyspecific expertise. The degree to
which those areas overlap evenly defines the overall expertise of the employee. The evenness of
the overlap will determine how well rounded the employee is.
Expertise
Intangibles
Technical
Expertise
“A” Player
Expertise
Figure 1: SCALABLE profile with EVEN overlap in TCI attributes
However, the effectiveness of the employee—and ultimately the employee’s scalability—is
governed by a set of “intangibles”. Figure 1 illustrates the attributes of an “A Player”. Sometimes it
is just as important to know what not to look for:
Click the following links to see the attributes of:
B players (Figure 2): www.ReliableGrowth.com/Figure2.bmp
C players (Figure 3): www.ReliableGrowth.com/Figure3.bmp
D players (Figure 4): www.ReliableGrowth.com/Figure4.bmp
Let’s take a look at each dimension in turn.
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Technical Expertise
This is the area with which CIOs are most familiar. Technical ability includes worker attributes
such as programming certifications, demonstrated levels of software competency, comfort with
all of the technologies and vendors that are on the company’s current and future agenda, fluency
with technical jargon, and so forth. Since most CIOs know how to interview candidates for these
skills, I won’t get into this here.
Company Expertise
For a scalable IT staff member, company-specific expertise concerns the application of
information technology that can leverage the company’s strengths and minimize or correct its
weaknesses. A truly outstanding applicant will know how most of the following functional areas
can influence your company’s overall performance now—and in the future:
The CIO who is
ten-times
more effective
than others will
always identify
A players
1. Company’s image
2. Level of planning/Marketing skills
3. Company’s reputation for quality
4. Company’s reputation for service
5. Accessibility to raw materials
6. Information availability
7. Familiarity with market
8. Company’s market share
9. Market size
10. Market growth
11. Pricing strategy
12. Research and development
13. New product ideas
14. Distribution strategy – domestic
15. Distribution strategy – export
16. Ease of entry
17. Geographical proximity
18. Sales force
19. Advertising and promotion
20. Cost of capital
21. Financial stability
22. Profitability
23. Return on equity
24. Debt to equity ratio
25. Manufacturing facilities
26. Economies of scale
27. Capacity to increase production
28. Ability to deliver on time
29. Technical and manufacturing skills
30. Manufacturing costs
31. Company’s leadership
32. Management aspirations for the company
33. Dedication and skill of workers
34. Entrepreneurial orientation
35. Flexibility and adaptability
36. Staff relations/Administration skills
37. Ability to respond to changing conditions
38. Relationship with suppliers, middleperson
39. Language abilities/Professional qualifications
40. Technical qualifications TQM environment
41. Marketing knowledge
42. Information management/Use of it
43. Technology management
Industry Expertise
For a scalable IT staff member, industry-specific expertise concerns the application of information
technology as it can maximize the company’s opportunities and minimize its external threats. A
truly outstanding applicant will know how most of the following external factors can influence your
company’s overall performance now—and in the future:
1. Population trends
2. Age distribution
3. Birth, death, and marriage rates
4. Lifestyle trends
5. Mobility trends
6. Population’s level of education
7. Change in buying patterns of typical family
8. Growth of economy
9. Size of market for products, rate of growth
10. Foreign exchange position
11. Stability of currency, convertibility
12. Per capita income, rate of growth
13. Income distribution
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14. Balance of economy (industryagriculture-trade)
15. Rate of inflation
16. Stability of government
17. Tariffs
18. Regulations in competitive practices
19. Product labeling requirements
20. Consumer information requirements
21. Product standards
22. Government controls & legislation regulating business
23. Non tariff barriers
24. Ethnicity of the population
25. Changes in consumer tastes
26. Business ethics
27. Social factors in business
28. Change in cultural values
29. Importance of environmental issues
30. Pace of technological change
31. Innovational opportunities
32. Dominant market players
33. Number of players
34. Production capability
35. Price advantages/Disadvantages
36. Distribution advantages/Disadvantages
37. Market segmentation
38. Product quality
39. Product positioning
40. Supplier power
41. Customer Power
42. Threat of substitution
43. Threat of new entrants
44. Intensity of industry rivalry
45. Transportation costs/Availability
46. Distribution within market
47. Extent and reliability of postal and phone systems
The cultivating
of star employees
must be
systematic,
as it is at
General Electric.
Obviously, it’s impossible to cover all these subtopics during a single interview. But detailing
these issues helps us to see the scope of the skills we need to see in our “peak performers,” both
during the interview process and after they’re on the job.
The CIO who is ten-times more effective than others will always identify A players who:
1. Understand the technology
2. Have a genuine affinity for the company and its markets
3. Can help the CIO understand and deal with the internal and external issues that keep the
CEO up at night
All of the issues above—in whole, in part, or in any combination—can keep CEOs awake at night.
The Intangibles
This is the most important area for CIOs who want to leverage their employees, and it’s also
the one most misunderstood by CIOs. The intangibles have a major role in determining the
employee’s scalability, and include such traits and abilities as:
4. Understanding Others
5. Managing Negotiations
6. Decision Quality
1. Setting Priorities
2. Results Orientation
3. Managing Vision
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Why Some CIOs Are Ten
Value-Based
Times MoreConsulting
Effective Than
Fee Models
Others
Of course, there are dozens of intangible leadership traits, and mainstream Leadership Gurus
have begun to invade the IT market with their own definitions.
For example, in a recent issue of CIO Insight magazine, Warren Bennis claimed that there are
just four enduring characteristics of leaders:
1. Adaptive capacity;
2. Ability to engage others;
3. Voice; and
4. Purpose.
In my opinion, that’s just the tip of the iceberg.
All GE employees
are scored on
the basis of
the Four E’s:
Execution,
Energy,
ability to
Energize others,
and Edge.
Regardless, savvy CIOs will know their company’s culture and industry before interviewing fresh
candidates or promoting from within. For example: The “Success Profile” of a Wal-Mart IT staff
member would be very different from that of an IT staff member from a small, high-tech start-up
venture. Wal-Mart values hierarchy and has a command-and-control organizational structure.
A high-tech start-up venture might insist that every IT staff member play many roles, thereby
placing a premium on staff members that can make decisions on the fly.
It’s up to every CIO to first define the IT department’s Success Profile for each position.
That means selecting the attributes and then defining what they mean. For example:
1. Setting Priorities: Has a bias for action; Spends time on what’s important; Can quickly
sense what will help or hinder the accomplishment of a goal; Values time; Creates simple
improvements and metrics; Creates focus among team members
2. Results Orientation: Always beats plan and stretch objectives; Consistently one of the top
performers; Very bottom-line oriented; Pushes self for results
3. Managing Vision: Sees beyond today; Is future optimistic; Can define their success relative to
the longterm; Can inspire and motivate others; Doesn’t shirk personal responsibility
4. Understanding Others: Listens first; Suspends judgment and assumptions until caller has her
say; Accepts diversity in others; Relates well to all kinds of people; Shows diplomacy and tact;
Uses callers’ emotional balance to close them to their benefit
5. Managing Negotiations: Gains trust quickly; Sees conflicts as opportunities; Can settle
disputes with a minimum of noise; Good at focused listening and can understand others
quickly; Is cool under pressure; Is appropriately funny and can use humor to ease tension
6. Decision Quality: Makes good decisions based on a mix of analysis and common sense;
Most of the person’s decisions turn out to be right over time; May be sought out for advice by
others
For a comprehensive list of 70 intangible leadership attributes and their behavioral definitions
like those above, email me at: [email protected]
Knowing how to attract, identify, interview, hire, measure, manage, and motivate a diverse group
of scalable star employees will make a huge difference when the CIO must appoint a Business
Lead (for example) to drive and communicate the progress of an ERP implementation to senior
executives. If this Lead is not a new hire, then the Lead may come from the CIO’s current pool
of software developers and system administrators.
Either way, the Lead should be able to explain the benefits of ERP within the context of
Company-specific and Industryspecific issues. If the Lead fails to do this credibly, then the senior
executives might question the competence of the IT team and the validity of the project itself. And
in the trenches, the Lead must be able to inspire adoption, especially when ERP solutions
represent a discontinuous innovation for the company.
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Why Some CIOs Are Ten
Value-Based
Times MoreConsulting
Effective Than
Fee Models
Others
Of Jack Welch and .400 Hitters
The cultivating of star employees must be systematic, as it is at General Electric. Throughout his
tenure as CEO, Jack Welch understood the baseball axiom that the acquisition of a .400 hitter
is always a blessed event unless the team’s batting average is already higher than that.
Lesson 1:
To radically increase their own
leverage, CIOs must manage
their organization as nature
would, with neither malice nor
pity. The business environment
is dynamic, and new-hires’
skills and characteristics must
always “lead” the trends. The
ability to make good decisions
regarding people represents
one of the last reliable sources
of competitive advantage since
very few organizations are very
good at it.
As a result, Welch mandated yearly “Session C” employee reviews, during which all GE
employees are scored on the basis of the Four E’s: Execution; Energy; ability to Energize others;
and Edge. Welch’s objective was to measure each employee’s performance and their potential
against these criteria. Employees from the same business unit are then rated against each other
on a bell curve.
Every year, the top 20% are lavishly rewarded and promoted, the middle 70% are allowed to stay,
and the bottom 10% are fired. Yes, fired. Every year. And Session C still exists today. In his book
“Straight from the Gut” Welch recounts how this natural selection process was easy for the first
few years. The .150 hitters knew they were bad, and they were summarily asked to leave. But as
the collective batting average for the team went up, the process became much more painful. Yet
Welch persisted, and the resulting organization became the rave of the Fortune 500.
Welch famously believed that if the rate of change in your company is less than the rate of
change outside, you’re in big trouble. Knowing that they had to contend with Session C, GE
managers would not even consider interviewing a candidate unless they thought the new hire had
the characteristics and skill set to create value for at least the next five years.
Starting today, begin a systematic process of:
1. Proactively searching out and identifying A players (from within or outside of the firm).
2. Using the most rigorous selection methods to make fewer mistakes and hire and promote
only A players.
3. Improving your department’s existing “human capital” by providing employees with
evelopmental training, and/or redeploying low performers into roles in which they can excel.
4. Requiring subordinate managers at all levels to embrace a meritocratic approach for the
creation of their teams.
Remember, this process should be ongoing and not just a onetime initiative. Manage your team
as nature would, and your star employees will love you for it and will want to stick around.
400 CIOs were
asked...
“What are the
three most
important
personal attributes
required for
success?
Ways to Identify a Future Star
Over the years I have come to believe that people are a lot like batteries: They are much more
powerful when linked together. However, different batteries do different things, and a powerful
battery that’s a poor fit with the others is useless. Here are several ways to hitch your wagon to a
future star:
1. Know what you need, and ask other department heads what they need from your people.
Using the form at http://www.reliablegrowth.com/ideal.pdf, get them to define their ideal
first, then a week later, ask them to rate individual staff members with whom they are in regular
contact (see http://www.reliablegrowth.com/actual.pdf). Score the fit between the ideal
and the actual. Is the gap trainable? See Figure 1 – 4 to appreciate visually the importance of
intangibles.
2. Develop leading and lagging indicators of leadership success. Going back to GE’s example,
how would you know on the front end if an employee had the ability to energize others?
What would be the leading indicators of that? What would be the back end effects of such an
increase in energy levels? How can you quantify these leading- and lagging-indicators such
that they are Measurable, Objective, Relevant, and Controllable (MORC) by the employee?
Assuming all metrics are MORC, link pay to performance wherever possible. You might need
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to be creative: One CIO gave poker chips to all department heads that his IT staff members
served. The department heads were told to give a poker chip to the IT staff member whenever
the staff member went “above-andbeyond” the call of duty to serve them. The poker chips
could later be redeemed for cash or time off.
3. Hire opportunistically. Post job openings always, not just when you actually need people. You
can’t hurry love, nor can you hurry a star hire. You’ve always got to be in the market for talent,
able to recognize it, and able to bid aggressively for it before your competitors drive up the
price for it.
4. Look outside of your industry. Worry about scalability first, because you can’t coach that. You
can train all of the other attributes, and you might be very refreshed by having someone on
your team with a perspective that’s completely new to your team.
Lesson 2:
CIOs who lack the god-given
command presence to lead
an organization must inject
this element into their team by
surrounding themselves with
talented young lions. And don’t
worry about being eaten alive.
The skills required of a lion
tamer differ from those required
of lions.
5. Interview for leadership attributes using the EAR technique:
• Example – Find an example of a situation where the person has the opportunity to
demonstrate the desired behavior. Then use probing questions to drill down on the situation in
which the behavior was used.
• Action – Ask the candidate to walk you through what they did to handle the situation.
• Results – What was the result of the behavior?
Understand that leadership development in IT is not a theoretical issue. In a recent CIO Insight
poll, 400 CIOs were asked “What are the three most important personal attributes required for
success in your current position?” 43% said “leadership” was required, yet only 40% said that
leadership was one of their top three strongest abilities. That means that this frequently required
attribute isn’t even in the top three strongest suits of 60% of CIOs. Which brings us to …
Care and Feeding of Young Lions
On a final note, realize that attracting young lions is only half the battle. The other half of the
battle is keeping them motivated.
Here are ten ways to deal with young lions:
1. Provide autonomy for them, allowing them to make decisions that affect their jobs.
2. Actively involve them in making business decisions and having a say in what course of
action the organization takes.
3. Honestly and openly communicate business realities and changes to them in a timely
manner.
4. Do not make them wait for information they need to get the job done.
5. Create a variety of challenges for them.
6. Give them multiple responsibilities to accomplish.
7. Do not bog them down with outdated technology and excessive reliance on paper.
8. Ask them how they would like to be recognized when they exceed expectations, and how
they would like to convey recognition for others.
9. Provide recognition in the form of meaningful rewards and incentives that have been
requested by them.
10. Conduct business in such a way that people can achieve a sense of balance in their lives
by pursuing flexible work schedules, telecommuting, providing alternative scheduling, etc.
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We also did a
comparison of
fee models to
determine which is
the safest.
A happy lion is an effective lion. All the better to do your bidding. To take your company’s
IT function to the next level, you’ll need to be able to get things done through your people.
Hopefully, when you delegate to them, how they handle themselves will be a positive reflection
on you. Character and values matter a great deal more than superficial skills and attributes, as
anyone who’s been married for more than five years can attest.
In conclusion, consider this: In a recent study of manufacturing firms with $1 billion-plus
in revenue, Forrester found that companies planned to spend $35 billion on supply chain
investments, but that most of that amount would go toward improving supply chain processes
internally and with external partners. In fact, technology was not considered a major obstacle to
supply chain performance—only 19% of the respondents ranked it as a significant impediment. A
sizable 46% named difficulty in changing processes and people behavior as their main roadblock
to better supply chain planning.
Forrester’s statistic offers a final reminder of the importance of human “intangibles” to your
company’s viability. Learning how to leverage your human assets is the greatest single thing
CIOs can do to improve their own “professional net worth.”
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By By Harry Joiner, Founder, Reliable Growth
Editor’s Note:
We’ve been searching for a
while for the right person to start
a new feature at JDETips—the
CIO Corner. We’ve found that
individual in Harry Joiner, an
articulate, experienced, strategic
IT professional and writer. This
article is aimed squarely at
our CIO and IT Director level
readers, and those who aspire
to be in the upper echelons of IT
Management.
Introduction
My wife has promised to buy me a new suit for my birthday. I’m really looking forward to having
some new threads, but I’m in a quandary as to what type of suit to buy.
Should I buy a summer weight suit? I live in the South where it’s warm nine months of the year,
but most of my clients are up North. Should I go with something stylish that will differentiate
me, or should I select something more mainstream? I want a distinctive and proprietary
solution, but not so much that I can’t integrate with my surroundings.
And what type of material should I get? The highest-grade wools are comfortable, but they can be
difficult and expensive to maintain. And what fabrics will look good with my legacy wardrobe, yet
maintain their functionality in two or three years’ time?
Now about the fit: Single or double-breasted? My wife tells me I need to lose a few pounds so
I can look great in a double breasted suit, but who wants to buy a suit with the expectation that
they need to downsize to wear it? And if I get an off the rack suit, then I’ll need to find a tailor to
handle the customization work. Of course, I could always develop my own suit “inhouse”.
Not.
Being a
great CIO
is equal parts
art and science.
Decisions, decisions. It’s a lot like IT, except that CIOs make decisions that can impact the
competitive position of their companies. And the pitfalls of making the wrong procurement
decision are much worse than simply looking bad.
Like having a keen sense of personal style, being a great CIO is equal parts art and science.
It means being able to deal with IT people who don’t really understand business, and business
people who don’t really understand IT. (And, unfortunately some who understand neither.) It
means having a technical understanding of what IT can (and can’t) do, and also means
having a grip on where you’re company is going, and what the environment is likely to look like
when it gets there.
Strategist, Know Thyself
The first rule of strategy is for firms to “know thyself”. This is much easier said than done because
in many firms most senior executives disagree on what the firm’s value proposition really is. A
value proposition is the implicit promise a company makes to customers to deliver a particular
type or combination of value. Some executives can’t even tell you that much, let alone agree on
what it is for their company.
The first rule
of strategy
is for
firms to
“know thyself”.
For example, Domino’s Pizza’s value proposition was “Fresh, hot pizza in 30 minutes or less.”
Simple, and their entire franchise was built on top of that premise.
A “franchise” is a proprietary way of doing business that successfully differentiates an
extraordinary business from its competitors. In Domino’s case, the type of ovens, the
specifications of the raw materials, the store and warehouse locations, the IT
infrastructure, and so on were selected and organized around delivering on that promise.
Yet most of the time it’s not that cut and dried. Ask ten people in most companies to recite their
firm’s value proposition and you may get ten different answers. This situation is especially
pronounced in service companies. But there is hope.
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Becoming a Sultan of SWOT
But there’s more
to SWOT than just
using it for
self-analysis.
•Strengths
•Weaknesses
•Opportunities
•Threats
One of the most effective mechanisms for company self-examination is the “SWOT Analysis”. The
SWOT Analysis looks at a company’s relative strengths, weaknesses, opportunities, and threats.
Understanding these four business elements is essential
to helping you understand what type (and how big) of an IT infrastructure you’ll need to support
your company’s operating model (or infrastructure). Remember, your firm’s operating model is
just the delivery mechanism for your firm’s value proposition.
Example: Suppose you are considering an enterprise-wide software package, and your company
is Weak in New Product Ideas, but Strong in R&D. Both of these elements are considered to have
a High influence on your firm’s performance. What would you do?
All things being equal, you might select a software package that facilitates communications
between front-line sales and product development. Or, you might select a knowledge
management module that allows customer polling, so that new product ideas and alternate
product uses are captured and analyzed. Pretty straightforward, right?
But there’s more to SWOT than just using it for self-analysis. Since no business exists in a
vacuum, SWOT provides a useful eye-in-the-sky view of the firm in relation to its dynamic
operating environment. Used thoughtfully, it forces a CIO to make trade offs with regard to
certain types of software and hardware functionality on the basis of what are the key success
drivers of the business – relative to what’s going on in and around the firm. First you decide what
is critical to the fulfillment of your value proposition, and then you invest around those functions.
Like Domino’s.
Additionally,
SWOT provides
a clean
dichotomy
between what’s
controllable
(the S&W)
and what isn’t
(the O&T).
Additionally, SWOT provides a clean dichotomy between what’s controllable (the S&W) and what
isn’t (the O&T) – thereby providing the inspiration behind the CIO’s Prayer: Lord grant me the
strength to change the things that I can, the patience to deal intelligently
with the things that I can’t, and the wisdom to know the difference. Let’s see why this is so
important.
DestroyYourBusiness.com
I love it when executives who are famous for their clarity of thought (like Peter Drucker) must
make sense of emerging technologies. So it was a real delight when General Electric’s Jack
Welch not only came to terms with the Internet, but mandated that all GE senior managers drive
an initiative called“detroyyourbusiness.com” (DYB). The purpose of this initiative was to force
GE’s leadership to develop ways that the Internet could create and/or destroy the value of GE’s
franchise. Essentially, DYB was an action-oriented SWOT review on steroids.
While internet stock gurus like Mary Meeker and Henry Blodgett were predicting the wholesale
downfall of the brick & mortar companies, Jack Welch was analyzing the three functional areas of
GE’s business where this technology would create value:
• the Buy,
• the Make,
• and the Sell.
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Figure 1
Figure 1 is my cocktail-napkin depiction of Welch’s model along side a SWOT framework. The
numbers represent the functional areas of competitive superiority of four hypothetical firms
– yours, and three competitors. Specifically, the functional areas are:
1. Raw materials Purchasing & Refining
2. Sales & Marketing,
3. Further Processing
4. Warehousing & Distribution.
The green arrows show the value chain from raw materials procurement down to the consumer
interface. For simplicity’s sake I have used the food industry’s Farm-to-Fork analogy. The
Buy and Make elements of the model represent the firm’s backend, while the Sell element makes
up the front-end or consumer / user-interface.
Organizationally,
this firm has great
flexibility and
adaptability.
Action item: With your SWOT grid in hand, suppose that …
Your Firm has excellent accessibility to raw materials and outstanding company leadership. In
addition to excellent internatioal distribution, Your Firm has a low weighted average cost of capital
(Return on Assets), but that is because it maintains a conservative debt to equity ratio. This low
debt / equity ratio will give the firm some operating agility during the next downturn, and its
return on equity should improve further when the firm negotiates a lower rate for its debt.
Competitor A has an outstanding marketing knowledge and familiarity with the market, and it
has positioned itself as the leader in the highest margin product category. Organizationally, this
firm has great flexibility and adaptability, and its entrepreneurial culture has insured its ability to
respond to changing market conditions.
Competitor B has excellent research & development capabilities and an endless stream of hot
new product ideas. It has a world-class TQM manufacturing environment, but its poor financial
structure limits its ability to increase production. It also has
weak leadership.
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Competitor C has the best distribution network of any of the firms, and this gives it an incredible
ability to deliver products on time. Its reputation for service is excellent, and its use of technology
is leading edge. Accordingly, its supplier relationships are outstanding. On the negative side, its
marketing needs improvement.
The opportunities facing the industry include favorable population and lifestyle trends, as well as
a promising change in the buying patterns of the typical consumer. The threats facing the industry
include declining rates of growth for the industry, increasing regulations in competitive practices,
and increasing threats of new entrants and product substitutes.
For which firm would you like to be CIO? Does any particular firm appear to be at a significant
advantage or disadvantage? If so, what should they do about it? Industry realities like these beg
hundreds of vexing questions for strategic planners, such as:
• Would a merger between Your Firm & Competitor A create more value than an alliance
between Competitors B & C?
• Will the Internet allow Your Firm to disintermediate all of the middlemen and distributors that
handle its products? How might Competitors B & C react to this?
• What happens to Your Firm if Competitor A begins to redefine consumers’ experiences and
expectations by offering them a solution that expands the industry’s definition of product
scope?
• What if Competitor C deems its assets to be more valuable in other industry settings? If
Competitors A & B have an alliance, how might this impact supply conditions in the industry?
What would happen to Your Firm’s pricing and its ability to finance its growth?
• How quickly does the demand function in the industry change? Is there an advantage to
Competitor B investing in flexibility or JIT manufacturing capability?
These five questions call for Scenario Planning and their answers can rock the world of any
CIO. Growth opportunities can come from new combinations inside the industry’s operating
environment, as well as uncontrollable changes from the outside. Exogenous changes can be
wrought by disruptive technologies, the War on Terror, changes in the tax code, or anything that is
essentially an Act of God. In these instances, all an industry’s competitors can do is stay flexible,
say the CIO’s Prayer, and adjust their sails.
Scenario Planning deals with how Your Firm should manage its alliances, distribution contracts,
purchasing agreements, technology infrastructure, and so on given the most likely industry
outlook. Which is exactly why it’s so important for the Firm’s leadership to be on the same page
with regard to Your Firm’s value proposition and underlying operating model. As Sun Tzu noted in
The Art of War some 2500 years ago, your confusion is your enemy’s greatest advantage.
The Blind Men and the Elephant
Of course, the whole notion of strategy is somewhat misunderstood in business. Sure, many
executives are familiar with the works of Michael Porter and Gary Hamel, but since most strategy
books take a unique approach to the subject (that’s how you sell books), a problem arises from
the fact that many executives have only read one book on strategy at most. Strategy, then, is the
classic blind men and the elephant dilemma: It’s different things to different people and they’re all
partially correct.
So what I’d like to do in the next few CIO Corner columns is dissect a few of the most famous
strategy frameworks and present them in terms that will make sense for an IT executive. Then
if you have any questions, I’d be happy to moderate a listserv or take your questions either by
phone or e-mail at [email protected].
Table 1: Key Activities and Descriptions
Case Study: ERP Benefits Realization in Action
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Five Secrets to Keeping Up with Technology
Five Secrets to Keeping Up with
Technology
By Andy Klee, President, Klee Associates, Inc.
Editor’s Note:
What’s tougher to keep up with
than stock market fluctuations
(or even who’s married to who in
Hollywood)? Our ever changing
world of technology, that’s what!
Why it’s so difficult and how we
can learn to keep abreast of
the latest technologies without
overtaxing
our brains is the focus of Dr. CJ
Rhoads’ column in this issue.
She’s got some secrets to share,
so listen up!
How wired in are you? Let’s be honest here — keeping up with new technologies is very difficult
for four reasons — one of which cannot be controlled, and two of which can be controlled
somewhat by the technology vendor and one of which can be controlled somewhat by the buyer.
1. There is constant competitive pressure to come up with new things in order to make money,
thus technology is always changing as the “latest and greatest” product to top the market
gets knocked down by the “newer and improved” version from a competitor.
2. The hardware and software concepts underlying technology are beyond the knowledge and
experience of most people.
3. The terminology used in the industry is fraught with the use of meaningless buzzwords.
Sometimes the same buzzword is used by different people to mean different things.
4. Some technology people are disdainful of “regular” people who don’t already understand
information systems, and are unable (or unwilling) to “translate” technical terms and
concepts, or do so in a patronizing way.
(Did you guess that the last two are controllable by the technology vendor, and the second one is
controllable by the buyer?)
The constant pressure to innovate is a fact of the business. The knowledge level of the
decision makers is a major factor, but most business owners - even many CIOs - don’t have the
background to quickly and easily keep up with technology. Even if they have the background,
they often don’t have the time. These obstacles make the task of keeping up with new
technologies almost, but not quite, impossible. Those who manage to do it may have learned the
five secrets I’m happy to share with you today.
1. Find a Trusted Partner, and Learn
If I wanted to invest in the stock market, but I didn’t know how to do it, I would find someone
else — an unbiased stockbroker or investment specialist; someone trustworthy and
knowledgeable to help me. I would discuss my goals and dreams with that person, who would
in turn help me make the right decision for me about my investments.
Technology is no different. If we don’t have the knowledge ourselves, we would find someone
trustworthy who has the necessary breadth of knowledge, and rely on his or her expertise. We
would want to make sure that person is well-informed and unbiased. Our trusted partner would
not have a financial incentive to lead us in any particular direction, so we wouldn’t rely on
vendors that sell the technology. We don’t let our trusted partner make the choices, we simply
learn from them what we need to know in order to make the right choices ourselves.
As we work closely with our trusted partner, over time we become more knowledgeable.
Eventually we know enough to make good decisions ourselves. If we relied on our trusted
partner too much, or let them make the decisions instead of learning from them, we would
continue to be left behind. Similarly, if our trusted partner isn’t taking the time to share the
knowledge, then perhaps they aren’t really a good partner. Finding good, solid, trusted
partners is not easy, but it won’t happen at all if we don’t look.
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2. Recognize Hype
Hype is rampant in the technology industry. Vendors can’t avoid hype because the market
forces them to promise beyond the capability of delivery. Think about it: If Vendor A tells us
something can’t be done, we might go to Vendor B who tells us that it CAN be done — even
though in the end it really can’t. By the time we’ve figured out that Vendor A was telling the
truth all along, Vendor B has our money and Vendor A has lost the sale.
We don’t let our
trusted partner
make the choices,
we simply learn
from them what
we need to know
in order to make
the right choices
ourselves.
Another issue is that vendors expect us, as buyers, to understand what information technology
is, and is not, capable of doing. Here’s an analogy. Suppose we live in the United States, and
we want to get to Africa. We go to a top notch car dealership - Mercedes Benz, for example.
We ask the dealer, “Can this car get me to Africa?” The dealer says “Yes, it sure can.” Dealers
who answer this question yes haven’t lied - because the car can get us to the airport, from
which we can fly to Africa. The dealers may be taking advantage of the fact that when they
said yes, we assumed that the Mercedes was EVERYTHING WE NEEDED to get to Africa.
But no car alone can get us to Africa. The car dealers do not worry about planes or boats we
might also need because they don’t sell those items. Car dealers would assume we know to
purchase those items, and that we will do so at the appropriate time. Besides - we do need a
car to get to the airport, don’t we? Is it the dealer’s fault we thought a car could get us all the
way to Africa? Expecting a car dealer to tell us that taking a taxi to get to the airport and buying
a plane ticket is a better plan than buying that Mercedes is asking a bit much.
This is how ERP vendors can be telling the truth when they list all the wonderful benefits of
enterprise-wide systems; and still we, as customers, mislead ourselves into thinking we are
getting something that we are not. The benefits of ERP systems rely on good processes, good
project management, full support at the top and the bottom of the organization, good training,
clean data, and effective people, hardware, and software. Can the ERP vendor be held
accountable because a customer assumed that what they purchased from the ERP vendor
was EVERYTHING they needed to get the benefits promised? We have only ourselves to
blame if we actually believed the hype. The bottom line: when a vendor tells us that something
can be done, remember that they are never saying that it can be done with their product or
service ALONE. People, process, and systems are intertwined, and all of them must work
together to gain the benefits.
3. Understand Your Own Hedgehog Concept and Stick to Technologies That Affect It
One of the difficulties of keeping up with technology is the sheer number of types of
information technologies.
Have you ever gone fishing? Did you memorize all the names of every kind of fish first? Of
course not! You probably didn’t memorize lists of bait before choosing the one to start fishing,
either. To effectively catch a fish, we just need to know which fish are in the rivers or streams
where we go fishing. If we are fishing for river walleyes, we need minnows for bait; if we are
fishing for stream trout, night crawlers are our best bet. We can completely ignore saltwater
fish and their related bait if we don’t go fishing in the ocean.
In the ocean of technology, how can we tell what to focus on? Jim Collins talks about a
Hedgehog Concept in his books Built to Last and Good to Great. The most successful
business strategy is knowing what you are good at and sticking with it, relying on your
strengths. Looking at your Hedgehog Concept is the best way to determine which, if any,
technologies are relevant.
If my company’s claim to fame is customer service, for example, it would be a waste of my
time to spend months evaluating back-end financial systems. But Customer Relationship
Management (CRM) systems? That’s a different story. I would want to know every CRM
solution available.
I would read all the magazine articles I could find about CRM. I would know which vendors
are selling it, and how stable they were. I would talk to others at conferences about CRM, and
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know how my competitors’ systems compare to mine.
In other words, we don’t need to learn about all the technologies – only the relevant ones. To
keep up with technology, we would focus on just those few technologies that are likely to make
a difference.
The most
successful
business strategy
is knowing what
you are good at
and sticking with it,
relying on
your strengths.
4. Pounce Like a Panther When the Right Technology Appears.
Panthers have a very effective method for hunting. Not being as big as elephants or as swift as
cheetahs, panthers like to climb trees overlooking a path where their prey tend to pass. Then,
after waiting patiently, at just the right moment, they pounce down on the prey. This is the
moment when inching out on a limb—even if it is a bleeding edge—is the right thing to do.
This strategy requires more knowledge and attention to detail. We must know exactly what
capabilities we need so that we can recognize those capabilities when they hit the market
(and be able to distinguish true capability from hype, of course). But when used effectively,
Pounce Like a Panther can provide exactly the right gear to complete the people-processtechnology chain and catapult a business to stratospheric success.
5. When No Pounce Opportunities Appear, Wait Patiently.
Keeping up with technology does not mean investing in every new thing that comes along.
When we are “pouncing”, a pilot project on a new technology related to our hedgehog concept
is warranted. The rest of the time, we should just watch new technologies go by - spending a
minimum of time, and not spending any money or effort at all.
Most people would agree that these days a six-month study on which word processor to use
would be a waste of time (though less than 20 years ago many companies were still doing
that). Because 90% of the world has chosen Microsoft Word, we can safely just choose Word.
What is less apparent, and just as true, is that (unless a global back-end process is part of
our hedgehog concept) a two-year study on which ERP system we should choose is equally a
waste of our resources. Just choose one! They all have good features and bad faults, so how
we implement them is much more important than which one we choose. We should spend the
two years planning how we will use the ERP system rather than researching which one is the
best (because none of them are “the best”).
Except for specific hedgehog concept areas, we want to buy commodity technology. We
should not worry that it is not the latest and greatest. We should not spend a great deal of time
investigating our choices. For most technologies, we can safely choose whatever our friends
and competitors are using, or even just keep what we’ve been using for the past 10 years.
Being bored with existing technology, or impatient for the next new thing, is a lousy reason to
waste our resources.
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The Hidden ROI of Training: Training Grants, Tax Credits and Incentives
The Hidden ROI of Training:
Training Grants, Tax Credits and Incentives
By Peter Green
Editor’s Note:
We’ve
mentioned
several
times that it is possible for your
company to have its JD Edwards
training paid for with State and/
or Federal grants. In this article,
Peter Green, “peels back a few
layers of the onion” so you can
see what is available. Instead of
crying, we think you’ll be smiling
after you get your first grant.
“Return on Investment” has long been a catch phrase on the lips of training executives and
financial analysts in corporate America. It tends to raise its head as corporations put plans in
place for major training rollouts such as new ERP systems or companywide process improvement
initiatives. Many studies and many millions of dollars have been, and will continue to be, spent in
efforts to discover the increase in productivity of the workforce in relation to the number of dollars
poured into making the necessary training occur.
So what kind of an impact can be made to the “ROI Graph” if you cut the cost of training in half?
From Fortune 100 corporations to self-operated Mom and Pop startups, every year over $1 Billion
is awarded to companies throughout the United States to offset the cost of training new and
existing employees. At last count there were over 150 different incentive programs available at
the state level, solely for training employees.
Every state has its own economic development goals and initiatives in place, a good number of
these include funding for companies who partake in the type of training a ctivity that the specific
state has determined it would like to support. Awards can vary from Zero to Multi-Million Dollar
awards to help lure or keep major corporations within the state confines. It just depends upon that
particular state’s policies and objectives.
Some states have also been known to go through phases of massive funding or no funding at all
of their programs, depending on the current economic conditions and fiscal priorities.
But for the most part if a company is about to embark on a training rollout of some kind, it would
be wise for them to stop right now and take a look at what funding may be available.
..companies
typically find that
training grants,
credits, and
incentives provide
a substantial boost
to the ROI before
the training even
begins.
How much could this potentially be worth to my company?
Every state training incentive has its own qualification guidelines, funds available and program
objectives. But for the most part qualified training costs typically include instructor salaries,
employee wages during training, development of training programs - both internal and external,
materials and supplies, instructional media, equipment used for training and reasonable travel
costs.
A state may award funding on case by case basis; therefore the award might be determined
upon the size of the operation and its value to the state. When processed and prepared properly,
companies typically find that training grants, credits, & incentives provide a substantial boost to
the ROI before the training even begins.
What types of training are included?
A common misconception is that many of these types of training incentives are designed for and
only apply to the manufacturing industry;
however it has been found in most cases that any industry type can apply. It has more to do with
the kind of training activity the state wants to see for its workforce, rather than what industry type
they are actually employed in.
Different industry types require different kinds of training, but in general there are a lot of
commonalities in what qualifies for the variety of incentives available. Typical qualified training
includes: new technology, new equipment, software implementations & upgrades, total quality
management - including Lean Manufacturing, Six Sigma, ISO etc., teambuilding and leadership.
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In some states, training incentives are linked to job creation, therefore making basic job skills the
main focus of what qualifies.
A state program may require your training to take place only at a state Technical College. In some
cases the state will even design, develop and deliver the training specifically for your company
needs. In most cases however, your training can be developed and delivered by any qualified
source, including your company’s own in-house trainers, outside training vendors, E learning,
Technical Colleges and Universities.
Is Federal funding also available?
On the Federal side, money is disbursed to each state under the Workforce Investment Act for
that state to use in its programs as it sees fit. There has been much talk in Washington D.C. for
many years regarding funding for high-tech skills training, but as yet nothing significant has been
made available to the general public or business community.
What are some of the steps to receiving state funding?
In all states with the exception of Georgia (allows a company to look back at the past 3 years of
training activity), a company must have a training plan in place to submit to the state for approval,
outlining what training is planned and how much it is expected to cost, before the training actually
takes place. If the application is successful, the Grant or Tax Credit is awarded at that time but
generally not paid out until the training has taken place.
This in itself requires that the training go somewhat according to plan, and documented in such a
way as to reflect this.
Why do more companies not take advantage of these lucrative incentives?
Most companies are not aware of what is available to them. This is especially the case in a multistate training rollout where the company will not have expertise with local incentives offered, and
where no relationship with those particular state officials exists.
Also, a lot of companies today will shy away from incentives available to them due to the belief
that the paperwork and the hoops one must jump through is often not worth the return. “Labor
intensive” is often a term associated with these state incentives.
It is true that every state program is different. It is also true that each one requires a unique
understanding of that one program, which therefore requires multiple contacts with those state
officials as well as the local employees regarding the actual training activity. Paperwork tends to
be extensive and the training has to take place as originally outlined.
How can I minimize the effort and maximize the return?
Many states will allow multiple year contracts. This allows a company to go through the
application and approval process just one time to receive a grant to cover a full 2 or 3 years worth
of training.
Also if a company has multiple locations in the same state, they can usually group all of their
activity together and receive one large award. Alternatively, many corporations will choose
to work with a company that specializes in just this one area 4on CIO Cornerof training cost
recovery who will handle everything for them.
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Where do I start?
A good starting point is your State web site; this will provide you with information on the various
programs available. Talk with the local state officials responsible for administering and approving
your local program for important details, nuances and particulars that could help with your
application approval.
Or contact a company that specializes in the area of training cost recovery who will already have
the information and state contacts already in place.
“Thars money in them thar hills…”
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Decisions, Decisions! Five Things CIOs Often Forget
Decisions, Decisions!
By CJ Rhoads
Editor’s Note:
When you’ve finally reached the
top of the summit,
it’s easy to forget all the things
you saw, and did, to get there.
So, as a refresher “course,”
Dr. CJ Rhoads shares her vast
knowledge once more to give us
a ground-eye view of the things
often not “seen” from up high, and
some common sense reminders
that can take any IT leader from
good to great when it comes to
decision making. After reading
this article, you’ll see why she
teaches IT Management courses
for JDEtips!
Leadership Is Tough!
When I accepted my first “chief” position (CTO at an e-commerce firm) I thought I knew what I
was getting into. I was wrong. I’ve learned a lot about leadership since then –mostly by gaining
knowledge from my many mistakes. Today, I see these same mistakes being made by many a
CIO.
One: Most Employees Cannot Learn New Systems As Quickly As Techies
CIOs might be tempted to cut the training budget to increase the ROI for new systems. Big
mistake. Often, new CIOs are chosen because they are pretty good at whatever type of
technology is used by the business. New leaders forget that few employees will pick up a new
system as quickly as they themselves might. Business research clearly shows training is the most
critical factor necessary for a successful project. Most systems are used by people who need a
lot more support than a few help screens.
Two: There’s More Than One Kind Of Cost
Some people (especially CFOs) talk as if there is only one kind of “cost” - cold hard cash. In a
new leadership position, CIOs may be pressured by other members of the leadership team into
making the same mistake. But they’ve simply forgotten that there are many ways to pay a price.
Here are several:
• Financial Costs
• Resource Costs
• Psychological Costs
• Marketing Share Costs
• Opportunity Costs
Yes, financial costs are important. We can’t forget them. But often a new leader will forget that
resources cost money, too. An internally built system may end up costing more than an off-theshelf system. It is amazing how often internal salaries are conveniently forgotten in planning.
Psychological costs are also real - and often far-reaching. As a VP for Bank One in the late 90s,
I was leading an integration project for 16 months with a team of 40 developers and project
managers when the project was suddenly, and unexpectedly, cancelled. This cancellation was
especially galling to me because fifteen months earlier I had recommended canceling the project
when I found that the goal couldn’t be achieved for the estimated costs. If it had been cancelled
then, we would have saved 2 million dollars. But more importantly, we would have kept the hearts
and minds of those project managers and developers. I never saw anything except half-hearted
effort from them after that.
Marketing Share Costs are also important. Sometimes we forget the impact of a new system on
our existing customers. If a new system is likely to lose more customers than it brings in, the ROI
showing how much money it saves is worthless. When Radio Shack went from a simple cash
register system to a computerized system that demanded name, address, and phone number for
a simple 98¢ cash sale, they lost a lot of customers (including me).
Lost opportunities need to be considered as well. We want to weigh the cost of doing this versus
that. Sometimes not spending money costs us more than investing in the right project.
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Three: Bandwidth Is Not Cheap or Unlimited
We take bandwidth for granted. Email arrives within seconds after being sent halfway around
the world. Videos can be viewed across the Internet. With these marvels, it is easy to forget that
many systems simply can’t work on a wide area network.
One of my clients (a Fortune 500 conglomerate) implemented an ERP system in 60 different
locations. After a few years, the CIO made a decision to upgrade to the GUI version of the ERP
system - without even thinking about the fact that a graphical interfaces take up to 20 times the
bandwidth of text based interfaces. The CIO could easily use the GUI system (given the huge
pipe of a 100 megabit local area network [LAN]); he didn’t think about the limits of the 256 kilobit
wide area network (WAN). After they spent hundreds of thousands on the software licenses,
they discovered that to make it work they would need to upgrade everyone’s connection to a T-1
leased line. That wasn’t in the ROI!
We don’t let our
trusted partner
make the choices,
we simply learn
from them what
we need to know
in order to make
the right choices
ourselves.
We can’t blame CIOs who confuse the relative speeds of LANs and WANs. Vendors often don’t
explain the difference, as demonstrated by the graph presented by an actual vendor at a Webcast
I attended last year (Figure 1). The graph indicates that bandwidth per user has been growing
steadily since 1999 (true). The problem is that the graph has two axes, so what appears to be
relative equity between the LAN and WAN speeds is really an order of magnitude difference. We
can’t put LAN and WAN speeds on the same chart (Figure 2 shows what it looks like if you try).
It would be like showing how a 6 oz glass of water has increased to an 8 oz glass on the same
chart that shows how a million gallon swimming pool has increased to a 22 million gallon lake.
We just have to remember that not every program works over a WAN.
Typical Bandwidth Per User
On Two Axes!
25
0.02
0.018
20
0.016
0.014
15
0.012
LAN
WAN
Internet
10
0.01
0.008
0.006
5
0.004
0.002
0
0
1999
2000
2001
2002
2003
2004
2005
Figure 1 – Typical Vendor graph showing LAN and WAN network speeds.
Typical Bandwidth per User
24
WAN & Internet Aren't Even On the Same Chart!
22
20
18
16
14
12
LAN
WAN
Internet
10
8
6
4
2
0
1999
2000
2001
2002
2003
2004
2005
Figure 2 – How the above graph SHOULD have looked to reflect reality
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Four: Integration is Always Harder Than It Looks
“We’ll just link the two.” How often have you heard that phrase? I’ve heard it from many CIOs who
have simply forgotten how difficult it is to link two different systems that were built without any
knowledge of each other.
There are literally hundreds of “gotchas” that can squirrel the works. To name just a few:
• One system stores the ID as a text field, the other stores it as a number.
• One system uses serialized dates, another system uses YYYYMMDD date format.
• One system puts contra records in the same tables, the other system has a separate table for
contra records and combines them when presenting the report.
• One system puts calculations in the queries. Another puts calculations in the reports.
The worst part is - until we know everything about both systems, we can’t even tell IF the two
systems will integrate, much less estimate the time it will take to get them to work seamlessly
together.
Five: We Can’t Estimate the Unknown
Which leads in to another common issue I see: CIOs forget that employees working on iagnosing
a problem cannot estimate how long it will take to fix until they’ve identified the cause. Once I
forced a poor overworked technician to estimate the time it would take to get the printers to work
with a new system we installed. He kept hedging, but I insisted on a timeframe – so he finally
said 3 days. Three days later, the printers still weren’t working. The poor man had worked 20
hours a day, and had tried dozens of different options – but none of them worked. (We finally
gave up and simply purchased new printers – he had been trying to write a new printer driver, but
since he didn’t know why the old printer driver didn’t work with the new system, he couldn’t write
the driver to overcome the problem.)
Another related tendency for new leaders is to throw people at a problem. After all, aren’t two
heads better than one? Well – not always. Once at First USA we had a particularly stubborn
problem, and the CIO insisted on a round-the-clock bridge call for the whole team until the
problem was fixed. Fourteen people didn’t fix the problem any faster than one person. (I finally
talked the CIO into allowing us to give up and install a work-around.) Whenever I am tempted
to throw bodies at a problem, I remember Werner Von Braun’s answer when asked by the US
government why the increased labor force was not helping to decrease the time it was taking to
get to the moon: “Nine women pregnant for one month does not have the same end result as
having one woman pregnant for nine months.”
Remember What It Was Like
Making decisions in a leadership position is much harder than most people realize. Often new
leaders must forget many of the skills they learned as they were moving up the ranks because
they now must deal with myriad factors they could simply ignore before. But hopefully they won’t
forget everything. Remembering these five factors when making decisions will help improve any
leader’s decision-making ability.
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ACOM SOLUTIONS, INC.
ACOM SOLUTIONS, INC.
What we do... Automate document and payment processes.
Benefits:
•Significant reductions in hard and soft costs
•Improved customer service
•Reduce security/compliance/legal risks
Solutions for:
•Document Management – (System i (AS/400) | Windows)
- Automated capture/indexing of system-generated documents
- Imaging
- Workflow
- Records Management
•Document Output – (System i (AS/400) | Windows)
- Format system-generated documents (P.O.s, Invoices, Statements, etc.)
- Electronic or printed output and delivery
- Customized rules-based (conditional) output
•Secure Corporate Payments – (System i (AS/400) | Windows)
- Electronic Payments
- Electronic or printed Payment Notifications
- Laser Check Printing
•EDI/XML Data Interchange – (System i (AS/400) | Windows)
Our solutions integrate with enterprise applications, such as ERP and CRM, with no programming
required. Typical deployments are completed in just weeks, and require little ongoing
administration, allowing smaller IT departments to focus on their primary duties.
Best Suited for:
Tactical deployments in accounting/financial departments.
History:
For over 24 years ACOM has been serving the needs of more than 4,000 organizations across
industries. In that time we have developed strategic partnerships with Xerox, IBM, and many
other technology leaders. ACOM’s corporate headquarters are located in Long Beach, California,
our System i (AS/400) division headquarters are based in Duluth, Georgia.
Guarantee:
ACOM offers solutions for Microsoft Windows and IBM System i (AS/400) environments, backed
by the company’s 30-day Total Satisfaction Guarantee.
Website: http://www.acom.com
www.acom.com
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2850 East 29th Street, Long Beach, CA 90806 | Tel: (800) 699-5758 | eMail: [email protected]
www.acom.com

How to be a more effective CIO

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