Florian Krueger

Posts Tagged ‘CIO’

Review Your Calculus of Cost

In 2.0, Management on August 7, 2009 at 9:08 am

As recently as a year or so ago, much of management’s attention was trained on growth and how to generate sustained performance over the long term.  In some cases, cost control took a back seat, with cost patterns masked by year-over-year increases in the top line.  In the 2009 economy, however, cost management is again front and centre, critical to short-term recovery and long-term success.

Companies must now focus on cost control, and that presents an opportunity to tune the business to today’s economic realities.  But we cannot cost-cut our way to renewed prosperity, and how we handle cost control today may well determine how fast prosperity returns.  The challenge is to measure accurately the corporation’s complex array of costs, understand their drivers and patterns, and control them in ways that won’t restrict the company on the way up as markets strengthen and growth returns to the agenda.

Now is the time to review your calculus of cost, the science and strategy of effective and forward-looking cost management.  Below are nine questions CEOs and their executives teams should be asking now – and regularly – about costs.  And as you ask them, keep in mind the overarching question: how complete, accurate and informative are our cost measurements to begin with?

1.   What is the exact cost of doing business with each of our customers?
2.   Are we losing business by causing unnecessary costs for our customers, or taxing ourselves by generating unnecessary costs for our suppliers?
3.   Do we still have the right mix of evaluation criteria in our investment and programme management decisions?
4.   Do we build ‘optionality’ into our major investment decisions of all kinds?
5.   Are we managing our talent cost in ways that maintain business capability and employee engagement?
6.   What categories of our expense do not move in concert with revenue, and why?
7.   What should we simply stop doing?
8.   Are we exploiting the learning curve to drive down unit and project costs?
9.   Can we use our cost performance as a differentiator or competitive weapon?

To manage costs well they must be examined in a methodical, objective and data-driven manner.  Anticipatory and analytical cost management works no matter where you are in the business cycle.

This is an extract from our Boardroom Imperative Review your Calculus of Cost.  A copy of the full document can be downloaded from our website.

Being a CIO During a Recession

In IT on July 10, 2009 at 8:54 am

At a recent nGenera Insight dinner Professor Michael Earl of Oxford University opened the discussion by reflecting that nobody seems to be confident about making predictions about the national or local economy at present. His own instinct, based on observations in the UK and North America, discussions with the financial community and experience of past downturns, was that recovery was likely to be slow and relatively distant. He posited that there are four different – and not mutually exclusive – generic strategies for CIOs in coping with these difficult times: two on the supply side of IT and two on the demand side.

One is cost management, such as adopting budget cuts, headcount restrictions and pursuing technology procurement savings. A second is re-engineering, for example revisiting sourcing strategies, re-balancing IT skills and re-architecting IT platforms.

On the demand side is re-calibrating the applications development portfolio, for example focusing on mandatory and quick payback projects, or improving MIS and financial control systems. Finally, there is preparing for the upturn – probably in a smart and low profile way.

It was agreed that while there are sector-specific and even firm-specific variations, most IT functions are embracing cost management actions, especially budget cuts. Also several are looking at re-engineering, especially sourcing strategies alongside the pursuit of better deals with all types of vendor.

Re-calibrating applications projects too is happening, particularly ranking projects under capital rationing. Preparing for the upturn, however, is more difficult, especially given current uncertainties. Perhaps at this stage it is more a question of thinking or anticipating what would be ‘cool’ projects in terms of competitive advantage once green shoots of some vigour appeared, rather than initiating a new project now.

However, whether addressing supply-side options or demand-side options, one critical success factor is clear. IT decisions still have to be made with the business and so strong relationships between the CIO and the CIO’s team with other senior executives still must be developed and nurtured. And perhaps the climate for such partnership is getting easier as more and more business leaders do realise that IT underpins most business operations and management processes today. In other words, there is a real chance that mature decisions about how IT can respond to downturn are being made.

If you would like to comment on Professor Earl’s perspective or continue the conversation please send me an email at florian@floriankrueger.com and I will keep you in the loop.

Success (and Failure) Factors for Web 2.0

In 2.0, Survey on July 9, 2009 at 1:42 pm

Web 2.0 tools, technologies and applications offer significant opportunities for organisations to share knowledge, improve performance and engage employees. But the technologies are still new to many, and mistakes and improper use of social networks, instant messaging, wikis, blogs, microblogs and other applications can derail the promise of collaboration, transparency and productivity.

To help understand the success and failure factors for Web 2.0 use we have just launched a research project. If you have been following, or trying to promote or manage, the use of Web 2.0 tools for business purposes in your organisation, we’d very much like your input. Participation simply involves completing an on-line survey. All responses are kept confidential and we will be reporting on the results later in the year.

Please send me an email to florian@floriankrueger.com to register for the survey.

CIO Roundtable in Frankfurt Germany in September

In Events on July 9, 2009 at 1:05 pm

On September the 15th we will be organising a roundtable / dinner event for CIOs only. The event will take place in Frankfurt and we are just finalising the negotiations regarding the location. What we do know is that it will be VERY close to the airport

Participants will come from some of the TOP 50 European firms and it will be a great opportunity to re-establish some contacts with peers, as well as to exchange some ideas.

Within the next couple of days we will have the speaker confirmed and we have two more slots open. Please send me an email if you are a CIO and interested in participating. You will not need to be from the German spaeking region to be able to join us.

I will keep everyone posted.

BTW Any questions, Skype me at fbjk2000

Ok, so I am a German and nothing in Deutsch?

In 2.0, Common Sense, IT on July 2, 2009 at 6:32 pm

Falsch, natuerlich lasse ich es mir nicht entgehen auch meinen Senf auf deutsch dazuzugeben. Immerhin beschraenkt sich das Blog ja nicht auf meinen Wohnort und der ist momentan ohnehin im Flieger.

Was treibt mich um und warum ist das was ich schreibe fuer den Leser potentiell relevant? Well, gar nicht, wenn der Leser kein CEO, CIO, COO, CTO, oder sonstwie im gehobenen Management ist, weil ich es selbst bei groesster Selbstbeherrschung nicht schaffe beim Bullshit Bingo nicht mitzuspielen.

Der Bereich in dem ich micht bewege liegt irgendwo im nirgendwo, naemlich genau zwischen dem “Business” und der “IT”. Auf der einen Seite haben wir CEO’s, welche der Meinung sind, dass heute technisch ohnehin alles moeglich ist und die auch nicht davor zurueckschrecken, den Scope nach 50% der Projeklaufzeit um 180 Grad zu drehen und auf der anderen Seite haben wir CIO’s, welche nach einer erfolgreichen 20-jaehrigen Laufbahn in der IT und deren Management wissen, dass Sie ohnehin die besseren CEO’s waeren und die Notwendigkeiten des “Business” viel besser beurteilen koennen, als ebendiese…

Das lieber Leser, ist ein Problem von dem ich glaube, dass es so alt ist wie die Menschheit selbst. Fremdbild und Selbstbild sind seltenst 100% identisch und koennen es auch nicht sein. Ich denke der Weise erkennt seine Fehler und laesst sich helfen. Hilfe muss auch nicht immer von einem Berater wie mir kommen, oftmals reichen Freunde (Keine Freibiergesichter, sondern FREUNDE), oder noch besser Familie vollkommen aus.

Ich habe mir mal den Spass gemacht letztes Jahr ein sogenanntes “Common Sense Reference Model” zu basteln, in welchem bei saemtlichen Entscheidungsprozesses auf bestehende Faehigkeiten und gesunden Menschenverstand referenziert wird. Sie wuerden sich wundern, wie viel man damit hinbekommt.

Das zweite grosse Thema was mich seit mehreren Jahren umtreibt, ist das Thema Nachhaltigkeit, oder “Sustainability”. Nachhaltigkeit im planerischen Sinne darf sich keinstenfalls auf oekologische Aspekte reduzieren, sondern muss oekonomische und soziale Themen gleichwertig mitbehandeln. Die Tatsache, dass keine Firma, welche mir bisher ueber den Weg gelaufen ist, wirklich ein allumfassendes Nachhaltigkeitsprogramm zum Leben erweckt hat, stimmt mich traurig und erklaert in meinen Augen zu einem grossen Teil, wieso die Wirtschaft da ist wo sie ist.

Wer mich kennt hat’s schon oft gehoert: Wir in Europa, sind die Einzigen, welche eine reiche Geschichte besitzen und die Faehigkeit,sowie die Erlaubnis haben, diese zu reflektieren. Daraus sind tolle Sachen entstanden, wie die Aufklaerung, oder die Demokratie, um nur zwei Besipiele zu nennen. Daraus wiederum resultiert die Verantwortung, aus dieser Geschichte Lehren zu ziehen und das Gelernte umzusetzen. Ausser schoenen Worten habe ich bisher noch nicht viel gesehen. Wer mich davon ueberzeugt, dass seine Firma anders ist, hat die Wahl zwischen meinen drei Lieblingsgerichten: Kaesefondue, Spanferkelbraten, oder Haeggis… Pick one und danke fuers Lesen…

Ihr Florian Krueger

Does the Recession make Horizontal Integration more Imperative?

In IT on July 2, 2009 at 5:38 pm

When business gurus like Don Tapscott (author of The Naked Corporation, Wikinomics and Grown Up Digital) say that “a recession is too good to waste” what do they mean? When the focus is on a shrinking order book and the need to reduce cost it’s often difficult to see what opportunities a recession offers. But one thing a recession definitely creates is a new context. A new context enables us to see things differently and open up new possibilities that previously were not thought feasible. It creates opportunities to make changes where change is most needed, and prepares our business for when we get back to managing growth — the next new context.

One such opportunity is to give more focus to ‘horizontal‘ integration. For all the good work that has been done over the years through process reengineering and implementation of enterprise systems, the reality is that most organisations remain siloed. In many corporations their divisions and business units operate largely autonomously with little or no sharing of processes, systems or solutions. Yet today’s customers expect the introduction of faultless new products, rapid order fulfilment and responsive customer service. They do not care — nor should they need to — about how their supplier is organised internally. Even if the functional silos are operating efficiently and meeting their Key Performance Indicators, it is the performance of the cross-functional processes that ultimately determines the customer experience.

The approach of many organisations to horizontal integration has been to create back-office shared service centres that provide a range of ‘services’ to customer-facing business units. Some of these have worked exceptionally well, but many less so because they have not addressed the fundamental problem of diversity. It is impossible for a shared service centre to provide ever-increasing superior service at lower cost if the ‘requirements’ of its customers are so diverse. Equally, the argument should not be for total standardisation, and one size does not fit all. The goal should be a greater degree of common and shared solutions, business processes and systems whilst recognising the need for authentic differences. The key words are authentic differences, and not differences that have evolved over time with no benefit to the customer.

Our colleague Robert Morison, and his thought partners James Cash and Michael Earl, argue in their HBR article Teaming Up to Crack Innovation and Enterprise Integration the need for Enterprise Integration Groups (EIGs) whose role is to establish the architecture and management practices essential for business integration. Furthermore they make the case that the EIG should:

  • Manage the corporate portfolio of integration initiatives
  • Serve as the corporation’s centre of expertise in process management and improvement
  • Provide staff to major business integration initiatives
  • Be responsible for enterprise architecture
  • Anticipate how operations might work in a more integrated fashion in the future

Whether the creation of an Enterprise Integration Group is the best approach for your organisation or not, one thing is for certain, there are significant benefits to be gained from driving for greater horizontal integration. The question is has the recession created the context to do so?

You can comment on this article or ask a question on the nGenera Community.

You can download a copy of the Harvard Business Review article Teaming Up to Crack Innovation and Enterprise Integration from our website.