by Jerry Fishenden

The real value of a good CIO

Apr 27, 2011

I’ve been reminded recently of just how big the gap can be between a good and a bad CIO, thanks to an independent review of an IT system in a large organisation. The evidence that emerged is a powerful illustration of the difference between a good CIO on top of their game and one who was definitely a few transistors short of a chip.

The audit was commissioned by the new CIO relatively soon after taking up the post, and focused on one of the organisation’s major systems.

It produced some shocking findings about system and unit costs.

The results suggested that the organisation’s supplier was charging over six times what a comparable organisation was paying for a similar installation.

Given the scale of expenditure involved — well into the tens of millions of pounds — this was a significant difference. The hardware used by the supplier to run the system involved was also gold-plated, with millions spent on over-specified equipment where commodity server hardware would have met both business and technical requirements for performance, scalability and contingency.

The report’s findings suggested that costs for the system could be reduced by about 30 per cent within the first year and by well over 60 per cent over the next few years.

Very welcome news for the CIO and his boss, but it also raised worrying questions about how his predecessor could have allowed such inefficiencies to come about.

The main culprit was a lazy and sloppy procurement process that had seen a large value contract let to a single supplier with no attempt to assess and control unit cost pricing. The supplier was effectively in command of the technical and financial details of the system.

The biggest problem for the new CIO was how best to remedy the situation. His options were limited by the contract signed by his predecessor, so what started as a poor and costly procurement process will now become a complex contractual renegotiation.

At a time when organisations of all kinds, and especially those in the public sector, are looking for better ways of improving services while delivering hard cash savings, a good CIO can clearly bring value well beyond their pay grade.

So when someone asks me what value good CIOs can bring their organisation, this is another example I shall have up my sleeve.

Together with some hard costs about just how expensive having the wrong CIO can be.

Jerry Fishenden is a director of the Centre for Technology Policy Research