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The CIO's Investment Challenge

Andrew Edison
9/27/2013

Some might say that the life of a CIO is not so bad: Deploy the most advanced technologies that money can buy and then reap the rewards of a highly efficient, productive network.

After all, the logic of deploying best-in-class systems seems sound.

But an INSEAD survey of senior executives at 225 global corporations commissioned by AT&T Inc. (NYSE: T) discovered that almost a fifth of them had spent significantly in cutting-edge technologies yet saw little or no return on their investments.

That's a painful realization.

The reality is, businesses see the best return on their investments only if they have standardized, shared and integrated their data, business processes, and IT systems. Without this rock-solid platform, it's like racing a high-performance sports car across an ice rink.

Nils Fonstad from INSEAD has a tale to tell about this point. Over a breakfast presentation of the research, an event organized by the business networking organization British American Business Council, he recounted how he had spent some time with a number of CIOs at Las Vegas casinos (it's a tough job, but somebody's got to do it). Nils was researching the expanding role of IT in the gaming and leisure industry.

One CIO had inherited very costly technology, with a jumble of business processes. This expensive data spaghetti saw the casino endure 300 hours of downtime every month due to 180 outages. He estimated that each hour of downtime cost $20,000. This meant every month the casino was losing $6 million. And yet, a year later, the new CIO had reduced downtime to ten hours a month due to 12 outages. It was still too high in his opinion but a great deal better.

How did he turn things around so quickly? He dramatically matured the digitized platform by improving three things:

  • He defined what systems would be shared, common and distinct across the properties.
  • He had his entire team of 50 as well as 15 non-IT managers go through training, improving project and process management.
  • He linked governance to projects by introducing five account managers -- one per key operating function -- to link what was going on in each of the five key business units with global objectives.

INSEAD's research determined that the components of a mature, digitized platform are accumulated in a coordinated and orderly fashion with technologies, processes, and data standardized and shared across business units.

It identified a very strong, direct statistical link between digitized platform maturity, new technologies and competitiveness. Firms that have mature, digitized platforms and invest in new technologies double the likelihood of being competitively agile compared to firms with immature digitized platforms that make similar investments.

It's an insight I've seen reflected among leading multinational companies here in Europe. Increasingly, customers are asking for help with strategic consultancy, architecture planning, and road maps to deploy new technologies in an integrated way with their foundation network. That way, they stand to reap the rewards of emerging technologies in areas such as cloud, unified communications, and mobility.

In other words, keeping the high-performance sports car in pole position where it belongs and away from the ice rink.

— Andrew Edison, Regional Vice President, EMEA, AT&T

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DOShea
DOShea
9/29/2013 | 3:23:04 PM
Re: Shocking
"I know it was you, Fredo. You broke my heart... You broke my heart!"

 

This also gets back to an old problem of investing/improving/expanding too quickly, or more quickly than the enterprise can get a handle on managing it all. Of course, some carrier organizations have landed in the same boat in the past, and could tell you all about it.
mendyk
mendyk
9/27/2013 | 10:01:10 AM
Shocking
300 hours of downtime a month? That's more than 40% of the time. Who was in charge of IT at that casino? Was it Fredo?
Ray@LR
[email protected]
9/27/2013 | 6:47:59 AM
Trusting the cloud
TO what extent are European businesses adopting cloud services as part of their critical day-to-day operations? Have CIOs got to grips with a combination of cloud and unified communications as a way to be more agile and boost productivity?
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