One of the vital lessons IBM learned from studying its 100-year history is that in order to survive for a long time organizations have to constantly transform themselves–and they must get out ahead of the changes that are coming rather than reacting defensively to them. There is no aspect of a business where this lesson is more important than in the IT department. Chief information officers earn their keep by managing their operations efficiently and effectively–making the trains run on time. But they’re even more valuable when they help create a commercial organism that’s capable of constantly renewing itself–a smarter enterprise. Then, they’re playing the role of a transformational CIO.
Jeanette Horan, who became IBM’s CIO in May after 13 years with the company, is just settling into her new role, but already she has a clear vision of what she wants to accomplish. “The CIO truly sees the whole company,” she says. “We touch every process inside IBM. Also, we’re a showcase for IBM’s technologies. We walk the talk.”
She’s focused on three spheres: IT transformation, which is achieving improvements in IT operations through bold strokes; business transformation, which is improving the integration of IT with the business; and work transformation, which is all about revolutionizing the way employees are provisioned with technology. She’s aligned with the Smarter Planet principles, using new technologies that make it possible to better monitor business activities, manage the company’s vast portfolio of assets and bring analytics to bear to optimize operations.
This is the first in a series of essays about The Payoff from Smart. The second and third installments will be published on July 22 and July 29.
Horan’s ambitious to-do list positions her in the vanguard of her profession. IBM’s 2011 global CIO study, The Essential CIO, revealed that 83% of the 3,000 CIOs who were interviewed say they have visionary plans that include such initiatives as applying analytics to their businesses, shifting to cloud computing and enabling their employees to work more flexibly via mobile computing and communications.
In her years at IBM, Horan has played a vital role in the company’s on-going operational transformation, which has been underway for nearly a decade. For the past three years, she was in charge of the company’s Blue Harmony project–a massive upgrade and overhaul of IBM’s SAP business applications worldwide.
In 2002, IBM launched a business-transformation initiative aimed at becoming what it later described as being the premier globally integrated enterprise. Since then, work has been going on across IBM to transform core business processes, create an IT infrastructure to support and integrate processes globally and help create a culture that fosters innovation. As a result, the IT function has undergone a radical rethink. It switched from being a federated system with 128 functional and business-unit CIOs to being a single organization operating under one global corporate CIO. Today, IBM’s core support functions are operated as shared services, which effectively eliminates unnecessary duplication in areas such as HR, finance and IT. Along with other efficiency measures taken since 2003, this shift has helped the company save more than US$2 billion in annual costs.
Here’s how Horan sees the three transformational themes she’s concentrating on now:
IT transformation: Turning IT into a shared service makes it possible to operate much more efficiently, via approaches such as data center consolidation, and makes it easier for IBM to broadly adopt cloud computing. One of the company’s first major cloud moves was to set up a development and test cloud, and, now, nearly all of product developer requests for server computers are handled that way. This has reduced server setup time from an average of five days to one hour and cut the number of physical servers that are needed. Other IBM clouds support HR, collaboration and data storage, and Horan is setting up a self-managed catalog of applications that will be available to IBM employees from the cloud.
Business transformation: The main goals here are to help the company expand rapidly in emerging markets and to enable the product and services business units to go to market in an integrated way. Blue Harmony, which is gradually being rolled out around the world, enables the company to pull together in a single system all the elements of proposals for clients (hardware, software and services) and track their progress all the way to fulfillment, invoicing and payment. IBM’s Blue Insight analytics cloud allows nearly 200,000 IBM employees to access business intelligence from more than 100 data warehouses. Analysis that used to take weeks or months can now be done in hours or minutes.
Work Transformation: For most of the history of the IT function in companies, employees have been forced to adapt to the technologies provided for them by the IT department. But that’s changing now. IBM increasingly is providing employees with the communications, collaboration and computing resources they want in the ways they want to consume them. Last fall, for instance, IBM launched Whirlwind, an internal mobile application store that’s populated with more than 500 applications. More than 28,000 IBMers who have company-provided BlackBerrys have registered for the service.
In her first month as CIO, Horan organized a handful of teams to look at such topics as security, workplace applications, mobility, etc. Her aha! moment came when she realized that she and her colleagues must connect all of these elements together into a coherent way so employees get the applications they need, securely, wherever they may be. “We have to remove the aggravations and make them delighted with IT,” she says. “That’s our challenge.”
That’s a huge hurdle. But addressing challenges that daunting is what it takes to be a transformational CIO.