The CIO Dilemma – Balancing Tactical and Strategic Projects

I had an interesting discussion last night on Twitter with Tajeshwar Singh (@tsingh4IT), a thoughtful and experienced IT pro working with a leading IT outsourcing provider,  about the differences and overlaps between strategic and tactical CIO planning. It was triggered by the disdain I have for a new “Top Technologies for 2010” prediction I saw, which included the caveat that these technologies will have a “significant impact in the next 3 years”.

I tweeted that I think such predictions are useless when most CIOs must prove return on investment (ROI) for major IT projects in less than 6 months. Tajeshwar got me thinking more deeply about this idea with his reply:

“cio demanding roi<6 mnths r taking tactical view;3 year tech horizon must for taking strategic view & decisions”

Indeed, this is emblematic of a really interesting challenge for CIOs.

The demand for a rapid ROI, typically less than 6 months, and in some cases shorter, is a fact for today’s CIO – even more so today than before the global economic downturn. I firmly believe that CIOs demanding ROI in less than 6 months are simply realizing and reacting to the modern reality that IT can no longer be a pure cost center. Ask almost any CIO, and you will know that the ‘blue sky’ IT projects that delivered results in 2-3 year timeframes are a thing of the past.

However, as Tajeshwar implied, this demand works directly counter to the mandate for great CIOs to think and act strategically, executing on a long-term corporate vision. The same CIOs that are trying to contain or reduce costs – essentially a ‘cost center’ approach – must also be acting to make IT a strategic asset.

This does not mean that strategic CIOs are dead, or even a dying breed. On the contrary, the ability to accurately envision future trends and get a head start on competitors is perhaps more important than ever, because the rate of change in IT is so much faster, and the barriers to entry for new technology innovations seem to be always decreasing.

So to be a great CIO you need to act tactically, with projects that contain costs and deliver ROI in less than 6 months; yet also provide the business with a strategic launchpad for innovation, competitive advantage, and shareholder value.

What sort of projects can do this?

How about:

Virtualization

This is perhaps low-hanging fruit. My research for EMA clearly shows the key outcomes of virtualization are well divided between short-term ROI and long-term strategic benefits.

For example, in the short-term, virtualization reduces hardware, power, cooling, administration, rent and even software costs. Around 90% of enterprises report that it delivers real, measurable cost savings. Loading up 15 VMs or more on each physical server, allowing admins to manage on average a 10% greater workload, saving an average of $200 per system on administration costs, adding as little as $37 for each new VM in administrator staff costs (up to 28 times less than a physical system), and reducing power costs by an average of 17% are rapid and significant ROI values.

In the long-term, faster system provisioning helps bring products and services to market faster, better DR capabilities provide a strategic defense against disasters and epidemics, and better workload and resource balancing provides faster response times and better customer service – a range of strong strategic opportunities.

IT Process Automation (ITPA)

In the short-term, EMA research has shown that sites with ITPA improve their MTTR, provide almost 65 hours extra availability per year for 24×7 operations, and sites with ITPA (typically larger data centers) save on average around $500,000 more per year on staff costs alone than sites without it (easily offsetting marginally higher staff salaries). These outcomes all provide substantial short-term ROI.

Meanwhile, 95% of enterprises report that ITPA achieves one or more strategic goals, such as improving the ability to adapt to rapid change (like rapidly integrating M&A), freeing up high-level staff, providing better security and compliance, reducing business and IT complexity, reducing human errors, and integrating with best practices. Moreover, 76% report that ITPA helps achieve 2 or more of these goals, and 55% report it helps achieve 3 or more. ITPA also correlates with an overall increase in IT maturity.

Lifecycle Management

In published EMA case studies, automated lifecycle management reduced regular maintenance windows for 50 systems from 2-3 days to just 10 minutes each, and cut the cost of  distribution of a new version of Microsoft Office from $90,000 to just $30,000. It also can help to reduce overall software license costs, allocate and reuse hardware more effectively, improve end user uptime, and reduce or eliminate the (often substantial) travel, staff, and downtime costs of desk-side visits to install new software or fix problems.

EMA research also shows that automated lifecycle management helps to achieve strategic objectives. It provides faster and better service to end users (and ultimately therefore to customers), enables IT and business staff to be more productive, lets business users take advantage of new software and systems much faster, provides essential compliance reporting, and maintains strategic security values.

Part of the reason that these technologies are both tactical and strategic is that they can all be implemented in short, sharp, phases that deliver fast and specific results, while establishing a technology basis that can be leveraged – reused, over and over, in multiple new ways – to deliver strategic benefits with little or no additional cost.

For a great CIO, such technologies are invaluable. They show fast results, justifying budgets and building confidence; yet they deliver technologies they can continue to leverage for better and better strategic outcomes.

All of which meets the needs of today’s CIOs much better than blue-sky, multi-year, technology dreamings.