Knowing What You've Got

Part 1 of CXO Priorities | Resources

The typical IT executive at a Global 2000 company is responsible for managing IT resources for the entire supporting infrastructure to run a modern enterprise. That can run to many thousands of user accounts, computers, networks, applications and systems. As Gartner points out, given the complexity inherent in a system with thousand of interconnected nodes, quantifying and maintaining the IT inventory can seem like a Sisyphean task.

And it can lead to costly and embarrassing under- and over-estimations. For instance, a few years ago as part of an IT Infrastructure Library (ITIL) implementation project, British Telecommunication PLC audited its IT assets and discovered it had 20,000 more computers than it thought. Avoiding such major IT resource and asset management problems, representing millions in underused corporate assets, is clearly a major CIO responsibility.

Fortunately, a properly implemented configuration management database (CMDB) system can solve such problems and improve IT service delivery effectiveness with a minimum amount of management overhead. Yet Gartner says it is a mistake to imagine an IT asset management system is useful only for hardware or capital assets.

A good CIO has to know not only what he has in terms of physical and investment capital, but also human capital

"To realize the most benefit from any asset tracking application, think of a company's total IT assets as a portfolio of managed resources cutting across the enterprise," Gartner says. "A good asset management system will root out redundant systems, extra network circuits, legacy hardware, unused software licences, underutilized staff and other costly overhead expenses, while providing the financial department with the tools to accurately capture the corporate IT inventory for audit and reporting purposes. A CMDB framework is used to develop just such comprehensive database and analysis tools to quantify the effectiveness of the existing resources and to pinpoint areas for spending adjustments to meet IT and business productivity goals."

The CMDB framework has always been an essential part of ITIL Configuration Management best practices.

Gartner says organizations with a properly implemented CMDB can expect substantial cost savings, but that given the cost, industries with high IT capital investments like telecommunications and financial services will experience a better ROI than retail or manufacturing, where corporate outlay on IT infrastructure is traditionally low.

So for the fiscally responsible IT executive, a CMDB initiative can represent either an opportunity to finally stop a major source of costly IT asset shrinkage or prove an expensive layer of unnecessary overhead, depending on the level of schema sophistication and vendor willingness to embrace the emerging standards. The bottom line is that as asset management methodologies become more consistent and automated, the implementation ROI becomes higher. "If vendors can create the proper framework, CMDB will deliver the information that allows corporations to become more effective in the marketplace," Gartner says.

Aligning Resources with Objectives

The most critical function of a business leader is to direct, align and coordinate resources in accordance with the objectives of the organization, says PricewaterhouseCoopers CIO and business solutions leader Graham Andrews. This is often a lot harder than it sounds, Andrews says, as the underlying culture and mission of an organization needs to be coupled with the articulated strategy or objectives. When the real objectives of an organization aren't even articulated in the first place or are commonly ambiguous or are subject to rapid change - as is often the case -- it is up to business leaders to understand the "pulse" of the overall organization

"For example a CIO may hear the objective of the business is to grow revenues or market share, but the CIO needs to understand it is not growth at any price, in any market, from any given product or service," Andrews says. "Without a deep understanding of all the business drivers involved, a CIO or any other business leader cannot align resources to the true objectives of the organization."

True business leaders have a role not only in delivering the business priorities but in determining exactly what these should be in the first place, he says. Internal and external factors come into play here and would generally include opportunity and risk identification having regard to factors such as customer expectations, globalization, competitor activity and so on.

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"So at the end of the day it all comes down to communication: The ability to hear and comprehend all the messages being delivered from within and from outside the business and to then clearly articulate the organization's response to ensure that people and resources are aligned and marching to the same tune," Andrews says.

Keeping a firm handle on fiscal resources means having a good understanding of financial management and strong commercial awareness, as for any executive, but also understanding how investment strategies, IT costs and capital investments fit within the bigger picture of the overall business and trading performance, agrees NineMSN COO Nick Spooner. That means working hand in hand with the CFO as necessary.

"I think it's too easy sometimes to set a strategy that involves a number of investments but to do that in isolation from where the business is performing or trading. IT strategy needs to be able to flex and move and evolve in line with what the business and the financial strategy is doing as well throughout the year," Spooner says.

"I think a good CIO absolutely is somebody that is very conscious of what is happening in the technology and the IT arena, but who also has great awareness of what is happening in the wider business, and is able to react and support and if needs be change the plan to fit accordingly. Working with the COO or working with the CFO is the key part of that."

People Are Resources Too

Of course, a good CIO has to know not only what he has in terms of physical and investment capital, but also human capital, says John Baldoni, CEO at management consultancy Baldoni Consulting. IT folks typically have a good insight into organizational resources because their work is enterprise-wide, he says; it's just that being aware of resourcing levels and managing them effectively are by no means synonymous.

"The finance folks can clue you into the financials, of course; the HR folks can advise on people. But the latter is the most vexing," Baldoni says. "Often what keeps CEOs - not CIOs - awake is wondering if they have the right people in the right jobs at the right time and if they do not, how they know before it's too late."

When it comes to resources, Spooner holds to the truism that its people truly are an organization's greatest asset. A good CIO will take all steps necessary to ensure his or her staff is both well skilled and highly motivated, and will be alert to the danger of focusing overly much on the technology side of the business, he says.

"In my experience there is a danger that there is so much focus on the IT or the technology side of things and that people sometimes get promoted on the basis of their technology skills as opposed to their people management skills and their leadership capabilities," Spooner says. "That then has a bit of a cascading effect in as much as you don't necessarily retain the highly skilled people that you would want in an organization."

Good human resource management means both valuing and inspiring your employees. Spooner says promoting people on the back of their technology skills, rather than their leadership capabilities, is a recipe for mediocrity that practically invites people to search for greener pastures. Good leadership comes down to both the way you lead and manage your team, and the way you build that team, he says.

"When I recruit senior managers and senior executives I look for the people skills, the leadership traits, the leadership skills, in an equal weight to the technical capabilities or the specific subject manager expert sort of skills as well," Spooner says. "And I think that ensuring that is one way of making sure that you build an organization that is focused on its people and their capabilities and on getting the best out of them."

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Sidebar | The CIO is the CEO of IT . . .

and they need their own general ledger

Today's CIO should be considered the CEO of IT. And much like any company's CEO, who relies on the general ledger to judge the health of the business, the CIO requires their own unique brand of general ledger.

CEOs have financial systems in place that contain a general ledger, which itself contains a number sub-ledgers, fixed assets or receivables, for example. Further, CEOs regularly look at profit and loss (PL) statements and balance sheets, and with all this information, they're able to effectively judge the health of the business from a financial perspective. Simply said, all that provides a 360-degree view picture to CEOs of what's going on with the company financially.

How do CIOs get this kind of complete insight into their "company" called "IT"? What assets (network, desktops and servers) are being used for what? What processes (the governance, management and security) are utilized to provide excellent service? What about the people and what projects are they working on? What service level agreements (SLAs) are in place and how are we doing? And most importantly these days, how does all of this relate to the objectives of the business?

Moreover, all of that information needs to be related to one another, just as with the CEO's financial view, where an asset purchase transaction needs to be mapped to an accounts payable invoice, which ultimately gets connected to a cash disbursement to a vendor, for example. CIOs need the very same ability with their IT information: IT's assets, servers, networks, SLAs, people and project components need to be mapped to the product that IT provides, which today is considered to be the business service.

When CIOs can map all of that information, suddenly they can be directing their "business" not only based on infrastructure components (database, applications, help desk) but in the opposite direction (vertical instead of horizontal) as well. This view says: "Yes, I need the database, I need the SLA agreements, I need the people, I need the projects", but it's all being connected to the business service that is being provided to meet the business objectives that executives agreed upon. That ultimately means that CIOs have their own 360-degree view of that business service as it relates to their IT department's financial aspects, infrastructure aspects, people aspects and process aspects. Such a 360-degree view can help CIOs make better decisions, by judging them in light of the overall business objective relating to the business service.

So, the model that needs to be worked toward is a unified service model (USM) which can track, for example, that a server can be mapped to an operating system or that a backup storage device can be connected to the server. All of these components have relationships to one another, they're feeding data to one another and all of that data comes together at the business service level.

A configuration management database (the CMDB) is the application that actually stores all that data, the configuration items (the raw material of IT) and their relationships to one another and the business service. But it should also have the ability to contain the model language (the unified service model) in it as well. Let's call that USM the "chart of accounts of IT". Because in a typical general ledger the order of how the numerical balances appear is determined by the chart of accounts. More simply said: Just as a CEO's general ledger has business intelligence sitting on top of it (that is, the chart of accounts), the CMDB, as a CIO's own unique general ledger, has business intelligence on top of it as well.

Further, with the CMDB's stored data, CIOs have the pertinent information they need on all IT's people, processes, projects, Unix servers, desktops, laptops, SLAs. And because of the USM the CMDB can quite literally "understand" the relationship all of those components have to one another, which, in turn, culminates up to the business service.

This effectively makes the CMDB the general ledger of IT (with the USM being the chart of accounts), which, in turn, means the CIO is the CEO of IT.

For the CIO today tasked with making sure the IT strategy is aligned with the business strategy, being the CEO of IT is about as aligned as you can get.

- Helge Scheil

Click here for Part 2 of CXO Priorities | COMPLIANCE

Copyright © 2008 IDG Communications, Inc.

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