 |
|
   
|
|
|
|
CIO guests Erik Brynjolfsson of MIT, Stephen Norman of Merrill Lynch and Michael Crowley of Avaya |
|
|
|
Mastermind Keynote:
Developing Strategic IT Initiatives in a Cost-Cutting Environment
Tuesday, 25 March 2003
CIOs Share Insight on Dealing With the Economic Downturn
Despite the pressure to do more with less, CIOs should not let cost-cutting stop the development of strategic IT initiatives that can benefit their enterprises in the long term. They must also continue to nurture their corporate culture by resisting the temptation to halt the training and professional development of staff members.
At the Mastermind Keynote CIO Panel, "Doing More With Less," at Gartner Symposium/ITxpo 2003, on Monday, the five panel members agreed that companies that have combined the strategic use of IT with the right "digital organization" are weathering the economic downturn far better than companies that have simply relied on cost-cutting measures to see them through.
The panel — lead by Dr. Marianne Broadbent, group vice president and head of research for Gartner Executive Programs worldwide, and Ken McGee, group vice president and research fellow at Gartner — began with a presentation on enterprise productivity by economist Dr. Erik Brynjolfsson, a professor at the MIT Sloan School of Management and Center for E-Business.
Afterward, Michael Crowley, vice president and CIO of Avaya Communications, and Stephen Norman, first vice president and chief technology officer at Merrill Lynch, shared their experience on coping with the global economic recession and what steps they have been taking to prepare for an upswing.
Dr. Brynjolfsson described seven characteristics of enterprises that have successfully built up into digital organizations. His research concluded that IT spending was only the "tip of the iceberg" for increasing productivity and that "corporate culture is the other nine-tenths." Enterprises that seek to expand their productivity despite cost-cutting pressures must implement complementary practices such as open information access, strong performance-linked incentives, active investment in corporate culture, and heavy new employee training.
"The [concept of the] real-time enterprise and quality initiatives like Six Sigma are at least as important as hardware and software innovations," Dr. Brynjolfsson said.
Mr. Norman and Mr. Crowley both outlined major IT strategic initiatives within their companies which their senior management team supports and continues to fund.
Mr. Norman ran two promotional clips that described the Total Merrill Concept, a customer relationship management initiative. According to Mr. Norman, although Merrill Lynch has reduced its IT spending by almost 30 percent and midsize projects are being "squeezed out," the company's top management acknowledges the importance of IT in fulfilling this new initiative.
"We are out of the starvation stage and into the bodybuilding stage," Mr. Norman said. IT process initiatives at Merrill Lynch have included developing blueprints of the desired future IT architecture and instituting quarterly business process reviews. When asked about specific technology initiatives, Mr. Norman also mentioned expansion of Voice over IP capabilities and Web-enablement of internal systems.
According to Mr. Crowley, Avaya is also engaged in a major IT initiative, which focuses on business transformation. During the initial, starvation stage, rigorous of redundancies was the first step. "We took down our mainframe and eliminated approximately 50 legacy systems," Mr. Crowley said.
Other cost reduction tactics followed by Avaya are server consolidation, aggressive negotiation with vendors and the adoption of offshore development. Mr. Crowley estimates that outsourcing Avaya's application development to a team in India has achieved a 70 percent cost reduction.
Among Avaya's most successful IT initiatives is its use of portal technology to open up its internal processes to indirect business partners. "We gave them the same tools as our direct salespeople, and it improved their productivity by 20 percent to 30 percent," Mr. Crowley said.
Dr. Brynjolfssen agreed that the challenge for CIOs seeking to fund IT initiatives like those undertaken by Merrill Lynch and Avaya is properly quantifying benefits. The question CIOs must answer, he said, is: "What are you doing to make the rest of the organization more productive?"
Sherry Fairchok
Gartner Staff
|
|
|
|
|
|
|
|
