COMPUTER BUSINESS REVIEW

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Issue Date: April 2008

The Russians are coming!

April 2008

In Yakutsk, the residents turn on their motor vehicles in November and turn them off again in March. If their car is switched off at any time in those four or five months the engine freezes and cannot be started again.

This is one of the many interesting things I learned in my visit to Moscow last week. I was giving a Butler Group Masterclass with Tim Jennings, the research director of Butler Group. I then attended a two-day CIO conference, which had about 150 participants, including the CIO of British Airways Paul Coby. I also addressed about 70 students and staff from the State School of Management, Russia's leading economic university. Oh, and I was interviewed by numerous magazines and websites.
Russians consider themselves a developing economy - when I was talking to a few people about South Africa and BEE, they were unimpressed: "That is all very well," they said, "but we have had to learn capitalism in the last 15 years." They were interested in the parallels between South African computing and Russian IT - the backlogs, the na#239;vety of businesspeople and politicians in what IT could do and the lack of resources. Russians reluctantly pay a fortune for technologists.
The discussions after each presentation were enlightening, and at the risk of generalising, I will tell you a few of my impressions. The Russians face exactly the same problems that the average CIO faces in South Africa: alignment, skills shortages, expensive contractors, outsourcing and the 'silver-bullet' syndrome - where executives demand complex systems by close of business please.
There was a brisk, and at times heated, discussion on the type of strategy that IT needs to follow. On one hand you had the 'paint-by-numbers' camp, who believed that you take the business strategy, work out what IT needs to do, and develop a comprehensive IT strategy for the next three years or more. The other camp, which I admit I find more alluring, is that IT is part of business, and as such must be there when the business strategy is compiled. One CEO started his discussion by saying that if he asked his IT function for a strategy, and they replied that they could not give him one until the business had developed theirs, crossed all the I's and dotted the T's - they certainly could not develop a strategy until business knew everything about their future. He had hired the first CIO who said that he would give an IT strategy after a month of looking around the business and then he would tell the CEO what he was going to do. This caused an uproar, with most delegates claiming that this was no way to run IT - you had to know what the business strategy was before you could do anything. However, towards the end of the discussion there was reluctant agreement that the IT strategy was for the benefit of the CIO, more than the business.
One CIO asked Paul Coby of British Airways: "What happens when there is not alignment between IT's strategy and the business strategy?" Paul answered without a pause: "Then the board finds a new CIO!" His view was that IT and business were partners in making the business work better. One of his recent articles on Terminal 5 at Heathrow, the most IT-rich buildings in England, was entitled: 'Terminal 5 is not an IT project'. The idea behind Terminal 5 is that the passenger does almost everything before he or she gets to the terminal - they buy their tickets, choose their seats and special meals, and print their boarding passes all from home. When the passenger arrives at the terminal, they drop their luggage off and walk though to customs and emigration - no queues. There is an enormous amount of complex IT to make this possible, but as Coby said, "I am happy with having all that complexity, provided the user does not see it."
Interestingly, about two-thirds of the CIOs wanted to follow the 'paint-by-numbers' approach, but one-third believed that IT's role was to establish the key performance areas for their business, define the principles that they would operate by, and then get on with it. They did not publish strategies, and if they did have documents, architectures and plans, they kept it to themselves. "Let the business measure IT on its business results," they said. They also did not feel the need for IT to justify its existence - they, and everyone else, knew they were contributing and no-one felt that it was necessary to define that contribution.
Another interesting and heated discussion was around outsourcing, with the final consensus being that the Russian outsourcing vendors were not providing the quality of service that they needed. Other outsourcing issues were around the perceived loss of control, and the perceived loss of data security. Finally, 'costs' has moved from first place in reasons why Russians do not outsource, to third place, so a realism is starting to creep in there. Paul Coby had a very distinct opinion about outsourcing - yes, you should work with outside companies, but you should have a multivendor, short-term approach. As he said about a seven or 10 year outsourcing contract: "I would like to see the CIO who can predict what technology will look like in 10 years time, let alone agree on a price."
Many of the interesting discussions happened outside the conference room. The delegates had little patience with people who had nothing new to say, or used the platform to advertise their services, and they showed their disinterest by leaving the session in droves. We all stood around in the foyer where much discussion was held about IT strategy, budgeting and governance. What was not high on any IT agenda was the environment, something that is gaining traction in South Africa thanks to our recent power-cuts.
I was impressed at how clever and reserved the average delegate was. They were not there just to listen, rather to look for better and different ways of doing IT. The concept of IT moving away from being an operations factory to being a provider of services is gaining ground. There was much interest in my cynicism about Service Level Agreements being a very poor governance mechanism. One magazine interviewed me on that topic alone. I hold that an SLA is far too limited to cover the services that IT provides to business. It is not a user view of the world at all - who cares that you provide 99,5% up-time? What was the business experience of IT? This is more the question that should be asked. An SLA does not cover the implicit expectations of IT: How is the IT/business relationship? Is IT involved in genuine business and improvement, or are they merely reactive to business requirements? What innovation is IT bringing to the table? How is IT helping business achieve its objectives? An SLA in my view is too much like a car dashboard - it tells you only how well the engine works. Not who the passengers are, not where you are going or where you have been, and it is way too contractual in tone for my liking. And an SLA cares nothing for alignment - you could be heading for the edge of a cliff, and the engine would be working just fine. Rather, IT needs a service catalogue, telling the business what they can provide at what price. And like a service provider, IT needs to market its services and have account managers. Some of its services should be business benefits realisation, and strategic services - SLAs tend not to cover that even though it is more important to business.
I predict that we will see more Russians coming to the fore in best practice IT. They are generally quick learners, and most importantly, they know what they do not know. It was refreshing to have many of the ideas presented in the Masterclass thought about and not have the first reaction of: 'Yes but', to every statement. I do not think that the delegates instantly accepted everything that was said - the heated debates indicated that - but the participants thought about what you said and then offered their opinion. Indeed, my one-hour presentation to the State School of Management was followed by a two-hour question and answer session. Such enquiring minds - these students asked all the difficult questions that I have ever been asked, and then some. Watch this space, the Russians are coming.
Terry White is a business and technical advisor for MarketWorks, sole distributor of Datamonitor, Butler Group and Computerwire research in southern Africa. He is also the author of three books on IT management. Contact him at terryw@marketworks.co.za


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