Changing Role of the CIO David Boyles Cx

Changing Role of the CIO David Boyles Cx. O Technology Advisor Microsoft Australia & New Zealand Microsoft Executive Session

Agenda: Role of the CIO • • • Changing Role of IT: Positives & Negatives CIO Role in Transition Skills of the new CIO Frameworks for Success* Outcomes* (*Note: Included in deck but not presented tonight) Microsoft Executive Session

Changing Role of IT: Positives • Fact: The market capitalisation of most public companies is only 2025% tangible (on balance sheet) and 75 -80% intangible (B. Lev, 2001). Intangible assets typically consist of repeatable processes - usually software on technical infrastructure (IT), people, brand, and intellectual property. • Fact: In most organisations, end user sales/service continues to shift from people to fully automated channels (IT). For example, global retail internet spend was approx. 30 B USD in 2000 and is expected to break 175 B in 2005. In services, many banks would be at or above 75% of all customer transactions totally automated. Dell has probably automated over 90% of all customer interactions. Pick your organisation or industry, with rare exceptions, the trend is the same. • Fact: In many organisations, employee services and processes are shifting to fully automated channels (IT). HR management, expense management, procurement, and even training are now fully automated in many companies, with the employee utilising the function entirely via “selfservice”. Microsoft Executive Session

Changing Role of IT: Negatives • Fact: Many (or even most) IT projects are perceived to be failures. Depending on which study results you prefer to believe, somewhere between 15% and 60% of projects deliver more or less what was promised. Change management issues are cited most frequently as the cause of failure, including: leadership/sponsorship, lack of stakeholder involvement and governance/risk management. • Fact: Most organisations exhibit significant governance weaknesses in key areas such as IT strategy, IT policy and information security (Various studies by E&Y, CSI/FBI, IDC, etc. ). Information security and other key IT strategy topics are simply not making the Board/CEO agenda. • Opinion: Most organisations view IT as a “shared service” with the same level of importance as property management or procurement. In reality, you can turn off most shared services for a day or two and no negative outcome eventuates. However, if you turn off IT at most organisations, business comes to a total standstill. Is IT “business core” or not? Should IT be centre stage in Board/CEO strategy discussions or not? Microsoft Executive Session

Functional Specialist to ? ? ? “Old” Role • Architecture, Planning & Policy • Solutions (SW) Development • Infrastructure Management • IT Leadership & People Development “Split” Roles “New” Role • Architecture, Planning & Policy • Solutions (SW) Development • Infrastructure Management • IT Leadership & People Development • Business Strategy, Innovation, & Change Management • Business Leadership & People Development CTO CIO • Solutions (SW) Development • Infrastructure Management • IT Leadership & People Development • Architecture, Planning & Policy • Business Strategy, Innovation, & Change Management • Business Leadership & People Development Microsoft Executive Session

“Traditional” CIO Skills • • Leadership Project management Vendor and sourcing management Time management & prioritisation Development methodologies Legacy environments Environments of the future (Web services/SOA): – Windows, . NET, C#, Active Directory, XML – Linux, Java (JBoss-Weblogic-Websphere), XML • • • Data Centre Operations Networks (wireless and wired) DRP/BCP (BU and IT) Info Security, as relates to IT Componentisation & reuse Data Warehousing, Data Marts Microsoft Executive Session

“Newish” CIO Skills • All of the “traditional” skills, PLUS: – – – – – Vision Aspirational and/or scenario planning Business strategy & analysis Change management Business judgment, and the courage to implement decisions Reengineering & Business Process Modelling (BPM) Team building Communications & influencing Public, employee, and customer relations Continuous improvement: TQM, CMM, inspection, etc. Microsoft Executive Session

Discussion Questions or comments? Note: Frameworks & Outcomes Sections Follow Microsoft Executive Session

CIO Frameworks For Success • Structured IT Excellence Model • Clear Roadmap (explicitly links all IT activities to delivery of business capabilities) • Leadership & Business Relationships* • People Practices* • Infrastructure* • Processes* *Note: These are part of the Excellence Model. Microsoft Executive Session

CIO Frameworks for Success: IT Excellence Model Copyright Microsoft & Infosys, 2004 Selection, development, work environment Strategic Partnerships: Key Suppliers Software: Business Applications & related intangibles Infrastructure: The “Dial Tone” of the Organisation Information Security IT excellence & the delivery of business capabilities is the result of a structured and comprehensive program in seven key areas. Leadership & Governance People: Critical Processes: Architecture, Strategy & Planning; Project Management; Software Development; Operations Management Microsoft Executive Session

CIO Frameworks for Success: Roadmap to Deliver Business Capabilities Short term deliverables (<6 months), eg: – – – – Review of needed business capabilities Leadership team assessment, appointments & commitments Cost targets Quick hits: business capabilities, performance improvements, etc. Top ten projects review Vendor contracts review Information Security assessment Longer Term Deliverables (6 -60 months), eg: – – – – – Business capabilities to be delivered, mapped to It project plans Leadership & People frameworks, inc. development plans Sourcing strategy & practice: vendor mgmt, quality, & costs Governance models: business alignment & stakeholder involvement Information Security improvements: BCP, DRP policies, frameworks, practices Software Development policies, frameworks, practices Project Management policies, frameworks, practices Architectural roadmap Applications & infrastructure SWOT analysis Microsoft Executive Session

CIO Frameworks for Success: Leadership & Business Relationships • Lead & govern proactively. Set up stakeholder governance structures early on. • Use open, fact-based communication to build trust. Solicit feedback. • Understand future business needs and build a strategic roadmap that delivers. Share the roadmap widely and frequently. Deliver. • Provide accurate and detailed costs for all IT services. • Publish performance metrics based on agreed standards. • Provide industry benchmark comparisons of costs and quality. Microsoft Executive Session

CIO Frameworks for Success: People Practices • Build a first rate IT team. Use a rigorous hiring model. • Define and publish your people & leadership principles (team member and leadership values and behaviour defined). Don’t tolerate exceptions. • Use “Open Book” management. • Deploy segmented development programs. Share development opportunities with business staff, eg project management training. • Train everyone on communications, teaming & quality techniques. Microsoft Executive Session

CIO Frameworks for Success: Processes • Identify, benchmark and set performance goals for all key processes (eg. project management; architecture, strategy & planning; solutions development; operations management). • Actively deploy continuous improvement tools and international standards: TQM, CMM, Prince 2 or PMI, ITIL, Inspection Processes, ISO. • Treat software development as engineering, use rigorous methodologies to prevent errors (find code errors via TQM/inspection processes versus back end testing). • Automate wherever possible for high quality, repeatable outcomes. Microsoft Executive Session

CIO Frameworks for Success: Infrastructure • Utilise “end to end” business process outcomes for reliability measures, not technical components. • Periodic SWOT analysis to discover single points of failure, bottlenecks, and business/user irritation. Pay particular attention to the desktop in “knowledge worker” environments. • Rationalise and standardise platforms to improve reliability and reduce costs. • Utilise component-based architecture for simplicity of installation and maintenance. Microsoft Executive Session

Some Outcomes : Driven or Supported by IT Excellence • Desktop TCO reduced from AUD 4000 to just over AUD 2000 per annum • Employee satisfaction from 46% to 80% • Cost to income ratio (financial institution) from midsixties to mid-forties • Reduction of telecommunications expense by 10%+ • 90% reduction of Severity 1 errors going into production • CMM Level 5 Certification (Software TQM) Microsoft Executive Session

Thanks, Any Questions? Note: The opinions expressed herein are my own, based on experience in the CIO/COO role, information provided by CIO colleagues, and publicly available fact-based research. Microsoft Executive Session