Keeping Operations Up and Running is Just Table Stakes

That was the money quote last night at the Churchill Club’s 5th Annual CIO Agenda, and it was uttered by  Doug Schwinn, CIO of Hasbro. (How cool would a job be where you could rationalize characterize playing experimenting with Transformers as “getting close to the customer experience”?)

His answer was in response to moderator Dave Margulius’ question about why none of the panelists were talking about the daily nuts and bolts of IT like identity management, uptime, application rollout, etc., but were instead focusing on fostering global collaboration, shortening supply chains, enabling new business offerings — all business benefits, not IT benefits. Schwinn said, and the other panelists nodded in agreement, that keeping the infrastructure and the fundamental apps up and running is only enough to come to the game — but nowhere near enough to win.

Each of the panelists: Schwinn from Hasbro, Douglas Merrill from Google, David Bergen from Levi Strauss, and Randall Spratt from McKesson, runs a large, multinational organization in a company that faces rapid business evolution and therefore requires inspired IT capability.

Levi Strauss is embarking on strong self-owned retail sales, a step away from the traditional channel-focused strategy of the company.

Spratt noted that there is a revolution brewing in electronic patient information that will require much more application integration and connectivity for all players in the medical supply chain — from vendor to provider to the ultimate end user, the patient.

Schwinn’s company is not so much a manufacturer as an IP company that creates or licenses content to create entertainment.

And, of course, Merrill’s company is revolutionizing information management and accompanying that with “interesting” internal IT challenges (e.g., they create development organizations in countries throughout the world and insist that the office infrastructure support any person working on any system; in other words, every Google app must — at least theoretically — have developers around the world simultaneously able to begin contributing code to any project in the company).

I’m sure all of them face pressing challenges, but there are some advantages available to them: this group of rapidly evolving companies is going to increase IT spend this year — no “IT doesn’t matter, run it as a utility” attitude here. All of them agreed they’re trying to reduce spend on everyday functionality — but with a goal of redirecting the savings to

innovation, instead of just returning it to the CFO solely to cut costs.

With regard to another industry trend, this group bucked conventional wisdom. When asked about industry consolidation, rather than bewailing the trend, the group was very supportive of it, indicating that consolidation allowed vendors to invest more in their products and make them better. On the other hand, they noted, they won’t look to the winners of this trend to help them with innovation; for that, they’ll continue to look to small vendors not wedded to cash cow applications.

Margulius created a very enjoyable game when he handed out paddles with one red side and one green side an queried the panelists and then queried the panelists about their reaction to different  industry  developments:

•   Web 2.0.: The panelists (save Merrill) groaned at this label. “Tell us what it is” one of them asked. Interestingly, despite their rhetorical rejection of the concept, all of them were applying specific examples of the category, especially collaboration technologies like IM, mashups (which, naturally enough they called SOA, which is the management-acceptable term for enterprise mashups), and so on. It just goes to show that you have to look at behavior rather than talk to understand what really goes on.
• Virtualization: Four green paddles. They love the concept.
• Open source: Four green paddles, held high. None of the “I’m too busy focusing on business value to look at open source” stuff here. They love it.
• RFID: Margulius introduced this by noting that “RFID seems to have gone quiet” and was surprised when a couple of the CIOs immediately put up a green paddle. Spratt from McKesson noted that RFID is going to become integral to supply chain tracking of pharmaceuticals to preclude piracy; while Bergen noted that Levi Strauss is moving to track every garment throughout its move through the company via RFID tags. A bit of a sleeper here, in that RFID isn’t very sexy (especially in comparison to Web 2.0), but, for those it’s relevant to, it’s really relevant.
• Vista: You couldn’t even call the reaction tepid. Red, and one panelist went so far as to hide his paddle inside his coat. Getting this kind of reaction from mainstream IT CIOs can’t make Microsoft very happy.

Interestingly, 90% of the audience was

people working for vendors. I’m not sure if they were pleased with what they heard, since a big part of what I took away from the panel is that these companies chart their own course and then look to find a vendor that can support their direction, rather than waiting and hoping a vendor will show up and tell them where they should be heading. I’ll bet any RFID vendors were happy, though.

All in all, I left the event feeling any “IT is dead” sentiment is misplaced. A recent survey indicated that 99% of CEOs believe information technology is critical to their company’s future, but only 32% of them look to the IT organization to help innovate. It doesn’t seem to me that any of the panelists work for those kind of companies.