CIO Dilemmas: Bridging Cost Control and Growth

January 15th, 2007 |
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Frank Buytendijk is vice president for corporate strategy at Hyperion. In this second podcast in the series examining the changing demands on the CIO, Frank discusses the dilemma of controlling cost and maintaining an organization’s ability to grow. Although a dilemma like this can seem intractable, Frank says that by taking a closer look at the problem in the right way, you can arrive at a true solution.

Transcript:

Host: Paul Lancour – PodTech

Guest: Frank Buytendijk – Hyperion

Paul Lancour – PodTech

The CIO of an organization straddles two worlds, the technical world and the business world, that CIO looks over a sea of problems in an environment focused on solutions, with the pace of business ever increasing. How can these competing needs ever be reconciled? I am Paul Lancour with Podtech.net and in this series of Podcast CIO Dilemmas, Frank Buytendijk Vice President for corporate strategy for Hyperion says, “If we are to find answers, we need to examine the problems more closely.” He’s distilled this down to four common dilemmas, each to be examined in a separate Podcast.

Our first discussion was an overview of Frank’s thinking on the matter ‘Defining Terms and Outlining Strategies.’ In this second Podcast we focus on the first of the four common dilemmas, ‘Bridging Cost Control and Growth.’

Frank Buytendijk – Hyperion

Well I am happy, we are starting with this particular level, Bridging Cost Control and Growth because this shows exactly what I tried to point out in the introductory Podcast, the first Podcast already, that if you didn’t listen to it by now, I would encourage you to listen first because this is a dilemma that we all know and we have solved in most or are solving in most of our businesses. Today it shows the dilemma based thinking, is not that hard or as scary as you would think because the key to this is, standardization. I haven’t come across a CIO in the last 18 months that doesn’t have significant standardization projects going on. Standardization in hardware, standardization in parties that you work with, such as software vendors and consulting firms and also standardization in business applications and particularly in our markets, and the market of business intelligence and business performance management, standardization is the hot issue that many CIOs are working on, and sometimes also struggling with.

Paul Lancour – PodTech

Standardization is a very difficult thing, I mean if you look at a lot of organizations they have fragmentation in their hardware, infrastructure, databases, applications, they have a portfolio of vendors with which they work. How did organizations become such a fragmented mess in first place, they need so much more standardization.

Frank Buytendijk – Hyperion

Well as always with most things in life, there’s always a multitude of reason why things happen, things coming together. Most our organizations today are trying to centralize a little bit as well as they come from a phase where many of the business processes and strategy implementation were decentralized and if you decentralized IT for instance, that needs to decentralized budgets, decentralized spending and decentralized tool choices, that in combination with, for instance, politics it is not always in the best interest of the people on the middle management to standardize, certainly not when it is about management information because that will bring the one version of the truth that you’ll say we want, but in our hearts fear because, we can’t choose the version anymore that fits our particular situation best.

By blaming “The tools that we have,” the fragmented tools that we have, we can led the advantages of such a fragmented situation. So, it is something that with a political sense, we have grown into as well.

Then there’s other reasons, for instance, emergence and acquisitions, where we need to live with a fragmented portfolio of tools as one part, the often newly merged company have to ‘A’ and the other side have to ‘B’. So, as you can see there’s lots of different reasons, why in many large organizations, there is simply, is a lot of IT fragmentation.

Paul Lancour – PodTech

I think it’s relatively apparent how standardization can save money for an organization but it doesn’t seem as clear how it can also lead the growth of an organization? So, how can end you both?

Frank Buytendijk – Hyperion

Well, indeed it is clear how it saves costs, but indeed leading to growth, perhaps is even more important and the answer to that is, in strategic alignments. If you look at modern management literature and the key to success in today’s world, it is by focusing the resources that we have and distinguish from the competition, one of the key ways of winning in the competitive world is by distinguishing yourself and that’s can only be done by a strong focus and aligning the resources and the people that we have with alignment. In this case I mean that we all understand our objectives, that we understand what is important, our priorities and that we truly understand what our contribution is, to those over all goals?

Now, not only do we need to understand what our contribution is to the over all goal, but also what our contribution is to our peers in the organization. That’s also need to contribute to the same goal because that is when we create synergetic effects. And that is why it is so important that we talk about the same data, the same performance indicators that we used to same definitions, that we used to seeing reference data or in other words master data and that shows why it is so important to use the same business intelligence. If we don’t speak the same language, we won’t be able to focus into align.

Paul Lancour – PodTech

Now Frank do you work for an organization called Hyperion Solutions and we’re spending a lot of time here talking about Dilemmas, but now that you’ve laid out the Dilemma of Bridging Cost Control and Growth, pretty clearly for us. I’m wondering if you can explain to us what solution for business intelligence to this problem might look like. If you don’t mind talking about solutions a little bit.

Frank Buytendijk – Hyperion

That is really funny indeed. We’re talking about Dilemmas and that we shouldn’t immediately jump on the solution, but we should understand the problem at hand first and that comes indeed from a guy working for Hyperion Solutions, but rest assured, we do understand the problems that our customers are facing. The solution over all is indeed standardization, but of course you need to have a standard that is able to cover the requirements of most constituents.

Now, of course everyone always claims to do everything for everyone, but we all know that is sometimes a little bit too much of marketing. In reality, there is no such thing as “the best tool” for everything. So, we need to have a little bit of a portfolio. This portfolio needs to consist of a number of things. First of all, in BI that needs to be strong, information consumption layer. We need to have different ways of disseminating the information to our audience, to users and different ways of consuming it sometimes that requires a dashboard. If you need to have an overview and a glance of the strategic performance indicators in the organization, sometimes if there is a highly analytical environment, where you can slice and dice through more (Inaudible) of the information figuring out, “Why stuff is happening?” In many cases it is a simple, and systemic static report, with everyone gets down little bit of information, then there’s only one particular way of interpreting incident.

The different ways of disseminating and consuming the information, there’s many different ways. However, it is equally important to have a strong information production layer. BI is not about the front end alone, it’s not about the report but what’s in it. If we want to have better alignment and better focus in our organization, we need to be smarter than the competition; we need to have more insights.

So, we need to have a layer in our BI environment that helps us to come to that smarter insight, by producing smarter numbers. Now, of course, there’s a lot of data in our organizations and a lot of smarter numbers that we need to manage. So, there is an information management layer as well and that is where we make sure that we all the use same definitions and we all use the same reference or in other words, master data.

Lastly, and here it comes, I would like to bring it back to the point, where I started. There maybe multiple tools that you need for this. So, you need to work with an open environment. BI is not a silo by nature; it is an integration technology for management information. So, you need to be able in Hyperion’s environment to also have non-Hyperion elements, for very specific, very particular needs that perhaps other users feel that they’re best served with.

Paul Lancour – PodTech

So, I am in CIO and I acknowledge what you say that my organization is fairly fragmented and needed to move to a more standardized organization. Where do I start to do that? This isn’t going to happen overnight I would imagine?

Frank Buytendijk – Hyperion

That’s true and we need to look at human behavior again, is everything in the end boils down to that. There’s basically two major drivers for change which are, pleasure and pain. So, pain for instance, would be the enormous cost of having multiple solutions and not being able to work with each other or meeting the tight deadlines, by having to move data from one system to another, to make sure that we don’t make mistakes, et cetera.

So, creating a standard would really be helpful and it’s easily accepted, if the pain is really high and the deadlines are just incredibly tight, but there is also the pleasure side. If it allows you to collaborate better with your colleagues, or if you are — for instance as a procurement department responsible for strategic relationship with your supplier, and you need to exchange information then it will help you make your targets and make your objectives, to reach your objectives, by using the same information with the stack holders that you deal with.

So, pleasure and pain helps you identify the first areas where you could standardize. Okay, you migrate, you standardize, but there is always purpose of users that perhaps would like to hold on to their own tools. Sometimes for good reasons, sometimes also for a little bit of hidden agenda the multiple versions of the truth. In those cases, maybe its about education, trying to sketch the bigger picture, a little bit more of persuasion like, having a corporate process that people have to follow, making sure that those processes grow at the expense of the home grown systems. In the end, sometimes you have to take a little bit more of an in-popular decision and simply just switch old systems off. It is really hard to achieve it, but it is necessary in order to create a standard. Standards are for the greater goods, but are not always recognized as the best solution for every one individual and that is by the way in itself a dilemma that you need to face.

Paul Lancour – PodTech

Yeah. That seem to be a part of all of what you are saying here is that the way to empower individuals in small groups within an organization, is to create standardization across the entire organization and that’s kind of counter-intuitive for a lot people and maybe difficult for them to accept.

Frank Buytendijk – Hyperion

Yes, that’s exactly I think is the dilemma based thinking can help us there. Now, if you look into what dilemmas mean, a difficult choice of some sorts, we need to find ways how to bridge that. In standardization is the dilemma here. The interesting about dilemmas, is the moment you have solved a dilemma by a bridge, in this case standardization, immediately a new dilemma unfolds. Particularly in this case that would be — if we have a standard how will we deal with the very specific functionality and very specific technologies, that are not part of the standard? Will they be custom builds within the standards? Will you allow specially its packaged applications? Will it be a combination of both and that’s indeed is the new dilemma that unfolds. And of course, I do not claim to have all the answers, at least not for you today.

Paul Lancour – PodTech

That is a really good overview of this particular dilemma and some of your ideas around it. So, thanks again for joining us today, Frank.

Frank Buytendijk – Hyperion

You’re welcome this is a lot of fun.

Paul Lancour – PodTech

Getting on the conversation, check out Frank’s blog, at blogs.hyperion.com\frankb. In our next Podcast we’ll examine the next dilemma in the series, Bridging IT Governance and Business Governance. Subscribe now, or go to www.hyperion.com for more information. And thanks for listening.

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