CIO Dilemmas: Bridging IT Service Delivery and Business Focus

February 5th, 2007 |
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In this fifth podcast in the series examining the changing demands on the CIO, Frank Buytendijk, vice president for corporate strategy at Hyperion, discusses the dilemma of bridging IT service delivery and business focus. Frank examines the unique difficulties a CIO faces, straddling the technical world and the strategic world of an organization.

Transcript:

Host: Paul Lancour – PodTech

Guest: Frank Buytendijck – Hyperion

Paul Lancour – PodTech

I’m Paul Lancour with PodTech.net and in this series of Podcasts CIO Dilemmas, Frank Buytendijck, Vice-President for Corporate Strategy at Hyperion, says if CIOs are to find real solutions for their organizations; they need to examine the underlying problems more closely. Frank has distilled this idea down to four common dilemmas; each one to be examined in a separate Podcast. In this Podcast, we examine the dilemma of bridging IT Service Delivery and Business Focus. Our conversation starts with Frank looking at how any CIO can cover the broad territory needed being technically proficient, and also able to work on strategic decisions as part of the executive team.

Frank Buytendijck – Hyperion

That is definitely the issue, the problem at hand, the dilemma perhaps not for a CIO itself, but for the executive team, what type of a CIO or what type of an IT functioning you would want. Traditionally, there are two types of CIOs. There are the CIOs that have grown up in IT and indeed are technically very proficient and are very good managers and leaders in the IT world, focussing on improving the service there of IT to the rest of the business and there are the executives that perhaps, they don’t grow up in IT, but have a finance background, or operations background or any other backgrounds and just landed in IT and see themselves much more as a business executive who happen to have IT in their portfolio, trying to figure out what the IT contribution to the business is.

The interesting thing is, that if you look at where business and IT alignment is going, this actually shouldn’t be a choice and what you really have to do both at same time. Let me put this in a very strong bottom line statement, IT, in a very fast space, is becoming the business itself.

Paul Lancour – PodTech

Could you explain that in a little more detail please? In what ways is IT becoming the business?

Frank Buytendijck – Hyperion

Yes, if you look at new business models that we see all over the world, we see that these business models are not only fueled by IT, but they consist mostly of IT itself. If we look at this strength, business comes from over the last 200 years from a lot of fragmentation, everyone doing a little thing there, there’s a shoemaker; there is the bakery around the corner; there is the guy who makes the tables, a shriner et cetera, et cetera. Then in the previous century, we moved to the model of mass production. I think, the best example started with the T-Model Ford that you could get in any color as long as it was black. I think everyone knows this particular story.

So, we’ve exported model well. The business model that we see in the 21st century, where we live now, is the one of mass customization. That means we have standard processes, standard ways of working, we have an operational excellence environment if you will. However, every single transaction or every single product or every single service going over those standard processes can have different characteristics. Think for instance, of a business model such as Nike iD, maybe you know the Website, nikeid.com. You can go there and basically design your own shoe. You look at the possibilities on the screen, the colors, the fabric, the various types of shoe within reason and within the boundaries that are there within the Website, you can put your own shoes together.

In the end you hit okay, you pay for it, and after a few weeks, your personalized shoes that you designed yourself are being delivered by the mail to your house. That’s a perfect example of mass customization and that can only be done by a heavy, heavy, heavy control of IT. In fact the Website, is IT itself and without the Website there wouldn’t a business model.

Paul Lancour – PodTech

As you say this blurs the distinction between the front office and the back office of a lot organizations. This sounds like a lot of the direction that a lot of automobile manufacturers are going in as well.

Frank Buytendijck – Hyperion

Yes, yes, because if you think about the idea where automobile manufacturers go and the example of Nike iD and there’re many more of these examples out there of mass customization. It is interesting that where is the front office, where the customer interactions stop and where does the back office start and vice-versa. In the case of designing your own shoes there is no difference because the customer interface, their Website, immediately triggers a transaction in the back office that gets delivered and that’s a customer facing moment again.

The most important thing is that the arrow is in the reverse direction. The arrow is not going from supplier to customer any more. This is the product that we design, that we will deliver to you. No, the arrow goes outside in. This is what the customer specifies, what he or she requires and this is how it should be translated into production and in service delivery terms and that I think is the core of the method of new IT driven business models.

Paul Lancour – PodTech

How do these ideas we’re talking about here relate to information democracy?

Frank Buytendijck – Hyperion

Information democracy is a term that we use to describe how we can service multiple stake-holders in and outside our organization with information. The examples of the automobile industry and Nike iD have to do with goods, cars and shoes in this particular case, but we see the same thing with information. There’s lot of examples where BI, Business Intelligence becomes the business, becomes the service itself. Let me give you an example, in many countries, particularly still in Europe, it is very normal for professional staff who have a company car and a company car really is a commodity for a car leasing company, as it is no one really cares in the end about which leasing company you were with, you care about the car that you get to drive.

The prices are largely the same. It is a really a highly competitive market. The only difference, competitive difference, that there is between one car leasing company and another car leasing company, to win a contract from the large employers that would supply company cars to their staff, is the quality of the management information that they supply to the car fleet managers within their customer base. Without the right information, there is no competitive differentiation.

Let me give you another example. Employee benefit programs within insurance companies that try to sell all kinds of fringe benefits, employee benefits through the employers to the employees. In effect, the HR department would outsource somewhat of the compensation package to an insurance companies think of, a health care plans, pension plans, all kinds of other insurances, all kinds of other financial services that you would get. So, you can outsource the work, but you can’t outsource the responsibility. As an HR department, you are responsible for the compensation package of your employees.

So what would be an interesting comparative differentiate them for something so broadly available as all kinds of financial services. The quality of a management information, that the insurance company would supply to the HR department, to make sure that the HR department can confidently outsource the work to the insurance company. That’s another example. I have seen tons of examples in all kinds of industries. BI in the end really is not management information for the pop management alone. BI is an asset that needs to be exploited like all other assets in our organization, like labour, like capital, like materials and like facilities and that is what we refer to as information democracy, where BI becomes an asset like all other assets that we have.

Paul Lancour – PodTech

This is the last of five Podcasts about CIO Dilemmas and it’s a wealth of information that you have imparted on our listeners and I’m wondering if there is the way we can incapsulate this here at the brief time we have left and just say what this means moving forward, what this means for the future of Information Technology in the organization and the way we view Information Technologies interaction with workers, customers, executive teams, kind of a capsule look into the future.

Frank Buytendijck – Hyperion

What I have tried to do in this Podcast, in just a few minutes each, is to convey a little bit of enthusiasm that I have for the idea of dilemma based thinking. It is really important not to jump to solutions immediately, but to look a little bit beyond the borders of the problem at hand and see which basic dilemma is at the bottom of it. I hope I have achieved this in all the examples that I’ve tried to give. I do realize that this is not easy stuff.

After all, it’s a dilemma and I hope my enthusiasm does lead to you downloading the papers that are there on the Website on CIO Dilemmas. In the meantime, I’ll also be discussing these a little bit more in the Web Blog that I have at blogs.hyperion.com/frankb and I would love to hear your reactions and contributions. Thank you very much.

Paul Lancour – PodTech

Thank you Frank for all of your information and your enthusiasm; I think our listeners really appreciate it. Frank Buytendijck is the Vice-President of Corporate Strategy for Hyperion, thank you Frank.

Frank Buytendijck – Hyperion

Okay, thank you very much.

Speaker

There is one more bonus Podcast in the series. Join us next time as Frank directly addresses the comments of business leaders about dilemmas faced by CIOs and check out smartbi.hyperion.com. Of course, you can always go to the Hyperion Website at hyperion.com as well. Thanks for listening.

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