05 Mar What is your CEO thinking? Read the signals
Prepare to enter the doldrums, because it may be the only way to get to recovery.
In opening the Fusion 2009 CEO-CIO Symposium Wednesday evening, Gartner Vice President and Distinguished Analyst Jorge Lopez gave more than 100 information technology leaders tips on how to read cloaked signals from their CEOs, and align with top management to advance information technology.
“In a time like this where you’re not really sure where the business is, the question is to find out what is my business model? Where am I going to make a profit?” said Lopez, who advises CEOs in his position. “CEOs in boardrooms are talking about 2009 being about finding the bottom point at which it will turn up again.”
Lopez noted that a yet unpublished 2009 Gartner Inc. survey showed that for the first time in five years tracking CEO top-of-mind issues, increasing revenue fell off the number one spot. Top spot this year: cutting costs. But at the same time, when asked what CEOs cared most about, IT came in number two, just behind product enhancement, the research revealed.
“We have to look at how we can use technology to better position ourselves in the competitive marketplace,” Ed Meachen, associate vice president of earning and information technology with the University of Wisconsin System, said following Lopez address. “This reinforced that even though we’re on a downward trend, it’s important to look at certain risks.”
In assessing how deep and long the current economic recession will be CEOs listen to forecasts predicting models including the quick bounce back V scenario, lengthier U, double-dip W and – worst case – the L, or a deeper global recession.
“We’re betting it will be done sometime in the fall,” Lopez said, noting other bets by top economists. “The truth is, we simply don’t know. For those managers that simply don’t know, they have to prepare for a number of difference scenarios.”
Eliminating the panic button
Lopez said most U.S. firms are now in the triage stage of the economic crisis. In triage, it’s all about cost cutting. Next, companies will enter the doldrums, a pessimistic time when economic news might not be all bad, but business leaders are still in panic mode and still doing more with less.
To succeed and recover – the third phase – CIOs should start to think about innovation while still muddling through the doldrums.
“We think we’re somewhere near the end of triage,” explained Lopez. “If you know where you’re at, you know how to manage it. The biggest risk you run is not preparing for the next phase, because you’re so caught up in current phase.”
There’s a lot on CEOs minds. Much of it, legally, is not information that can be shared even with CIOs. In fact, technology practitioners could lag 18 months behind in gaining critical knowledge.
How to navigate? Lopez gave insight to seven CEO issues.
In restructuring, the number one issue, CEOs clear off the table and cut or streamline costs significantly. Don’t be surprised, however, by acquisitions, partnerships and divestitures to emerge at a time when prices are at a record low.”This is the opportunity for you to be the hero and say, `here’s how we can reduce costs,’” Lopez said. “Some CEOs love this time because they can run without the normal rules applying.”
Lopez urged technology leaders to, quoting the political adage, “never waste a crisis,” instead using it as leverage.
Issue number two: CEO’s cant write-off fast enough dumping assets, debts, old plans, investors, staff, managers and partners. Those in IT should expect demands that are driven by public relations, due-diligence, and so-called “zombie” projects which have no direction or get canceled.
Chris Murphy, editor of InformationWeek, asked Lopez about “how plugged in CIOs are to the big picture,” noting a huge sense of urgency from CIOs. Lopez reminded that because of federal regulations governing certain company disclosures, it’s unlawful to share some important information.
“Keep tracking what CEOs are saying,” Lopez advised. “They’re the canaries in coal mine. When you look and see there’s blue skies and sunshine, but and you, unfortunately, can see otherwise. Please don’t ignore that kind of information.”
The trust factor
With so many companies failing at catastrophic rates, there has been real loss of business trust from the perspective of the public and many stakeholders. This issue is crucial to recapture for recovery, Lopez said.
IT can expect to see new interest in things like reputation management, electronic discovery and a strengthening of “data driven” culture. Also a possibility: strengthening information transparency and a serious fore into Web 2.0 as a means to more openness.
Also at issue: Globalization instability, or the convergence of a “two-speed economy,” with countries like China growing and nations in the West not. IT practitioners need to plan for new trade routes opening, because it’s unclear which country will emerge from the recession, likely redefining free-market structures to make them work and asking new questions about “social model” capitalism.
Major new government regulations are coming as well, making CEOs nervous.
“There are lots of unknowns,” Lopez explained. “This would be a great one to try to engage your management team looking at the costs that could come from regulation in your industry.”Long-term driven sovereign wealth funds, saviors of economy before running out of cash Lopez said, is an issue that will drive CEOs to think about how to innovate their business.Another issue that isn’t going away, according to Gartner research, the eco-friendly, or green, IT agenda. Things like giving attention to emissions and e-waste, looking for travel substitution and energy systems.
This point struck a chord with Karyn Schairer, a senior account executive with Madison-based SupraNet Communications Inc., which is creating a green data center. Schairer noted that green IT, is “not just marketing.”
In closing, Lopez encouraged IT leaders to take those risks and establish a leadership role in their organization.
“This is a time to make enormous positive impact,” Lopez said.
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