Digital Revolution or the Wild, Wild West?
by David Tibi

We have all heard the joke regarding the newly appointed CIO sitting in his new corner office for the first time. While confident-perhaps overconfident - of his abilities, the new CIO came from a technical background and had little management experience in operations or finance.

Outside his door, he could see his recently fired predecessor carrying boxes of personal effects. The previous CIO put his boxes down, walked into the office, and announced "I'd like to continue a tradition started years ago by a person who had this office long before you and I."

The ex-CIO took out three envelopes, numbered 1, 2, and 3, and slid them across the desk to his replacement.

"Whenever things get bleak, and the management is coming down on you, open an envelope and follow the advice inside." The new CIO thanked his predecessor and, in order to humor him, took the envelopes and placed them in his drawer.

Two months later, it looked like the new CIO was in over his head. He was unable to overcome his lack of experience in operations and finance and his schedules were in a shambles. The senior management was breathing down on him and it looked like the gig would be up. By accident he stumbled across the three envelopes. On a whim he opened #1 and read:

Blame your predecessor

Suddenly the CIO felt like a weight had been lifted off of his chest. He called a meeting with the senior management where he blamed the disastrous state of the IT organization on his predecessor. Unbelievably, the management bought his arguments and the heat came off the organization.

Six months later, with the IT organization still no better off, the management started to come down even harder on the CIO. Remembering how successful the envelopes were the last time, he opened up #2 and read:

Reorganize

Great idea! The CIO called a meeting for the top management and announced a sweeping plan for reorganizing the IT organization. This, he claimed, would fix the lack of progress in implementing projects and start to cut back on the amount of money wasted by the IT organization.

The senior management accepted the CIO's plan and the massive reorganization began. Once again, the pressure on the IT department and its hapless CIO let up . Five months later, even with the reorganization, the senior management realized that there was no improvement in the IT organization. They started coming down harder than ever on the CIO and let him know that if things did not change quickly they would be making changes starting at the top.

The CIO was panicked. The only thing that had kept him from being fired already was the advice from the envelopes, so he went to #3 and opened it and read:

Gather 3 envelopes. Number them one to three ....

In the last days of the 20th Century, the CIO's job was evaluated based on whether the IT department was regularly over or under budget, he or she could keep the company's 800 pound gorilla users appeased and whether major projects were delivered on time. Those days are over.

The cost of Information Technology to the average US-based company became the number three expense in 1998 and is projected to become the number two expense by 2004. Percentage wise, Information Technology accounted for 6 percent - 8 percent of the average US-based company's expense in 1998 and forecasted as doubling to 12 percent - 16 percent by 2004. Other top three business expenses include labor as the number one expense both in 1998 and forecasted to remain number one in 2004 and the physical facility which was the number two expense in 1998 and is project to decline to the number three spot in 2004.

What does this mean to the average CIO? It means corporate Information Technology expenditures shall soon be subject to traditional management metrics applied to all other aspects of the business. Up until now, most CEO's and CFO's have abdicated their management responsibilities of IT expenditures to the CIO. It has led to a situation I call "the Wild, Wild West," where the CIO (typically not a business school graduate) has focused strictly on technology, (and what sounds like techno-babble to the typical CEO and CFO) things like e-commerce, wireless, clustering, VPNs, giga-whatever, etc. Unfortunately, the focus on management metrics has been little more than a charade.

What most CIOs will tell you is they mange IT costs with buzzwords like Return On Investment (ROI) and Total Cost of Ownership (TCO) and that sounds good, right? It does sound good until you come to the realization that IT assets like all other business assets must be tracked for utilization, mission support, purchase price, recurring costs, and reliability. Let's face it, "if you can't measure it, you can't manage it!" When you look a little closer and talk to those in charge of administering the vast majority of corporate intranets, you find out centrally available documentation of the corporate intranet is almost nonexistent. That's right, they don't have up-to-date, centrally available records for what is being used, where it is physically located, who is using it or which documents govern the life cycle of the assets, such as maintenance contracts, lease agreements, software licenses, floor plans, rack elevations or test results. Now, you have to ask, if managers don't have access to a centralized information repository with anytime/ anywhere access regarding what they have, who is using it, where it physically is, how they physically connect, or what it is going to cost to keep or replace it, how effective can these management methodologies possibly be?

Let us take a look at the core of the problem which is not a technology problem but a lack of management processes and centrally available decision support information which are critical to competently manage rapid deployment of change to the mission critical technology infrastructure. When it comes right down to it, we are talking about managing change or as it is known in the IT industry, "moves, adds and changes (MACS)." Most decision support for provisioning corporate MACS is being left up to field technicians who decide out in the field while they are fulfilling any given work order which resources are going to be used for the job at hand. Tracking this information is critical and MAC provisioning decisions need to be made with big picture decision support information during the planning process, not willy-nilly.

Documenting what changed after each MAC is completed would be a major improvement for most IT organizations; however, using the decision support information it provides to make decisions before MAC work is ordered is the real target.

Most network outages are caused by technicians who invoke inadvertent negative results to network traffic, which is caused by network engineers who order faulty design change specifications because they do not have adequate decision-support information during the planning process.

Stopping change to the corporate intranet may seem like a possible alternative to managing change. Unfortunately, change is the only constant on the corporate intranet. Change is measured by how many MACS are done on the corporate network annually. To measure annual changes to the corporate intranet, industry insiders use a formula called the "churn rate." The churn rate is the number of MACS performed annually, divided by the number of employee-users on the intranet. The average US-based company has a 40 percent churn rate. In other words, every employee-user in the average US-based company is subject to a MAC every 30 months.

The days of the "Wild, Wild West" for the corporate IT infrastructure are coming to a close. It's time to start getting serious about managing change and therefore, "lifecycle management and TCO" of the corporate IT infrastructure resources, and it's your move.


David Tibi, CEO of Intercontinental Online Systems, Inc. (IOSCORP) has over 17 years experience in the IT Infrastructure industry with a focus on network infrastructure design, implementation and management. Mr. Tibi founded IOSCORP in 1988 to provide network infrastructure consulting to the Fortune 500 community. IOSCORP has provided services to companies such as Computer Sciences Corporation, Fluor Daniel, Hughes Aircraft, Nestle USA, Packard Bell, PEPCO, The Los Angeles Times, The US Pentagon, Vons Companies Inc., and Xerox. Contact Mr. Tibi and IOSCORP at 949-852-3688 or visit www.ioscorp.com.

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Copyright 2001 by David Tibi. All rights reserved.

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