Pete Solvik's Three Tips for CIOs

For this, Voice & Data chose Solvik as there is probably nobody better for this purpose than the man who transformed
www.cisco.com into $17 billion-a-year minting machine for Cisco (Cisco transacted 90 percent of its business in fiscal 2000 through its site). A feat that Yahoo and Amazon are still trying indeed very hard to accomplish. The CIO of Cisco who has been named one of the top 25 unsung heroes of the Net by Inter@ctive Week, Solvik also heads the Internet Business Solutions Group (IBSG) in Cisco which has provided professional services to 75% of the Fortune 250 and 50% of the top 250 European companies. 

TIPS

1. Make sure that the company's "business owners" make and fund IT spending decisions 

IT departments are not in the best position to understand and influence a company's major value drivers. In most companies, the IT department is typically given a "top-down" budget and chartered with prioritising which projects to fund with little input from the company's business units. It is no surprise that when deciding which applications to fund, IT departments usually choose funding projects based on their return on investment (ROI). As a result, applications that can significantly improve a company's relationship with its customers, suppliers, partners, and other external constituents end up as Tier 2 projects. What remains in Tier 1 is a list of cost-reduction/process-re-engineering-type applications. Historically, Tier 1 of projects typically take too long to implement, often trigger cross-business-unit process changes, and require upgrades to sections of the enterprise infrastructure that do not have a clear "owner." These are just a few reasons why more than 50 percent of all IT projects incur significant cost overruns, and more than 30 percent are terminated before completion. By shifting spending decisions to the business owners instead of relying on IT departments, technology decisions are tied closer to the business unit's overall goals and meet customer needs, therefore making the expense justifiable.

2. Use infrastructure as a strategic enabler 

The problems are exacerbated when companies do not have a robust infrastructure in place. Such companies typically view infrastructure as an unavoidable expense that must be endured, not a strategic resource whose value far exceeds the dollars spent to install it. As a result, infrastructure spending is evaluated "one application at a time," which leads to incremental and haphazard build-out of the infrastructure; new network hardware or databases are installed only when an application requires additional equipment. Without a standards-based, end-to-end infrastructure, applications built for one portion of the enterprise do not run across other portions of the enterprise, making it difficult for business units to share mission-critical data. Such "incrementalism" also raises the total cost of infrastructure ownership and creates silos of isolated systems across the company. To realize the benefits of a true e-business, a company must make an initial strong investment in infrastructure. A robust, standards based infrastructure can bring about universal connectivity inside and outside an organization¾providing ubiquitous access to information that might not otherwise have been possible. This allows the company's internal and external audiences to have access to better information for better decision making for the company¾again another justifiable expense.

3. Tie IT's objectives and rewards to the goals of the company's business units 

Though most companies would agree on the need to align their IT and business-unit objectives, few put the appropriate processes and incentives in place to create such a partnership. To work efficiently and cost effectively-and achieve the ultimate business goal of increasing shareholder value-IT organization and business units must ultimately share and be rewarded for achieving the same objectives.