Rogow: Midmarket Companies Enjoy Agility Edge over Enterprises

Ann All

I've written before about the struggles of CIOs who want to be seen as business strategists, a few months ago sharing some of the challenges encountered by Chevron CIO Louie Ehrlich. He offered some good advice, emphasizing the importance of making sure IT environments are efficient, educating IT staff about business needs and goals, and educating business leaders about IT capabilities.

 

CIOs appear to be making real headway in breaking out of the technologist box, judging by remarks made by Bruce Rogow during last night's keynote address at the Midmarket CIO event in Miami. Rogow, a former research director and executive fellow at Gartner who now heads his own IT Odyssey consulting firm, told Midmarket CIO attendees that 55 percent of CIOs he's interviewed in the past year are active participants in business and product development. IT is "moving from the back of the house to the front of the house," Rogow said.

 

IT plays a key role in a company's brand, something Rogow said more companies are discovering by performing internal analyses that assess IT involvement in applications that touch their customers and business partners. If they haven't done so already, CIOs should perform such analyses as it's typically an eye-opening exercise, Rogow suggested.

 

Being more directly involved in revenue-generating activities is great news for CIOs, but it also presents them with a whole new set of challenges, many of which Rogow covered in his presentation. He said most of the executives he interviews tell him that while business is fine now, existing business models will not be viable within five years. Thus, there's an explosion of emerging IT-based market approaches, encompassing areas like mobile technology.

 

Many of these approaches begin with business rather than IT funding and will be relatively inexpensive-at least at first. But funding for the resulting "drop-down" expenses-ongoing support, maintenance, integration and updates-often comes from IT.


 

CIOs previously responded to these kinds fo new and disparate technologies by trying to rein them in and create a utilitarian footprint for global IT delivery. But now CIOs won't be able to employ this approach, Rogow said. They should expect changes and lots of them-in vendors, architectures, skill sets and management styles.

 

That doesn't mean they should abandon standardization entirely, of course. IT organizations will be challenged to maintain standardization where it makes sense, to control costs and increase efficiencies, while at the same time creating a more flexible IT environment to accommodate all of the coming changes.

 

The most common ways for CIOs to lower costs are to "beat the daylights out of your vendors" to get better deals and to consolidate IT resources. Yet those opportunities dwindle over time. While CIOs could once count on lowering their IT spend by 10 percent to 15 percent using these techniques, Rogow says it's now more typical to see savings of 5 percent to 8 percent. CIOs will be challenged to restructure their IT assets with the goal of achieving long-term savings, not just short-term ones.

 

Rogow had some good news for attendees of this conference, which is geared toward CIOs of midmarket companies. Compared to large enterprises, midmarket companies enjoy clear cost and time advantages in retooling their IT environments.

 

He didn't name names, but Rogow mentioned an enterprise client with whom he discussed a proposed IT change. The executive told him he'd propose the change with his architectural review board at the next scheduled meeting, several months down the road. Midmarket companies, which tend to have less complex infrastructures and fewer bureaucratic hurdles, "can cream the heck out of companies like that," Rogow said.



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