Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers three questions of core interest to you, ranging from career advice to enterprise strategies to how to deal with vendors. Submit questions directly to [email protected]
Question A: For what applications should a midsize retail bank consider application service providers?
Our advice: All of them.
The Underlying Question
Beneath the ASP question is the fundamental business question of how a midsize retail bank can compete effectively with Bank of America. Bank of America has a huge advantage in number of branches, number of ATMs, and number of application programmers (not to mention assets). And it does a great job training its branch personnel (and especially its "Premier Banking" staff) in "friendliness," so the standby of "we're friendlier," though it's a favorite of medium-sized bank ads, doesn't really cut it.
The good news is that parts of Bank of America's size advantage (the branches and ATMs) are becoming irrelevant. A growing segment of the population does its deposits electronically, its transfers and payments on the Internet, and its cash withdrawals at the grocery store.
Even more good news can be found in the ability of a midsize bank to be more agile than Bank of America, by which we mean more flexible in policy and faster to adopt new technology.
As regards policy, present Bank of America with a financial request that doesn't fit neatly into a paragraph in the policy manual, and the place goes helpless. With fewer layers of management, your institution can be far more responsive.
That leaves "speed in adopting new technology," which gets directly to the ASP question.
A Fable (told as a fairy tale, but true): Once upon a time, there was a large savings and loan association that discovered that its savings accounting system was broken, and that the fixes required were severe. The CEO asked a computer vendor if a new computer system could be installed in 90 days, and was told that the only way was to install an application package "as is," i.e., to make policy changes instead of programming changes wherever there was a conflict between the package and association policy. The package went in on time; it required that the board make about a dozen changes to policy. Upon examination, it turned out that the policies replaced were either illegal or less profitable than the package's approach.
In-House Or ASP?
There's no question that a small in-house staff can install new applications quickly on modern platforms. Nor is there a question that modern platforms can be honed to produce cost parity (or even a cost advantage) with Bank of America on a per-account-per-month basis. Furthermore, it's possible that a well-managed in-house system can achieve a cost advantage over an ASP approach.
The real question lies in agility as a strategic differentiator. If you're serious about being more agile than Bank of America, then you have to keep focused on policy flexibility and technology leadership. To preserve technology leadership, it's important to be willing to abandon an installed application in favor of a better one. Unfortunately, it's human nature to fall in love with work well done, which means you may develop a dangerous loyalty to a well-managed in-house application. (And your accountants may develop a dangerous loyalty to un-depreciated book value.)
Do consider the ASP approach. Should you adopt it, remember that it's all about agility. Pressure your vendor for new features, and be willing to swap vendors to get them.
Question B: What role, if any, should Google desktop have on enterprise PCs?
Our advice: Locating relevant or actionable information is one of the most pressing problems faced by all of us today. A recent study calculated that 5 exabytes (an exabyte is a million terabytes) of digital information was generated in 2002, while 18 exabytes was communicated between users! Clearly, there are many business and technical opportunities to enable users to do a better job at searching this data.
Google has become the premier search engine on the Internet for two reasons. First is the very clean design of its Web site and search process. Second is its patented method of assigning "ranks" to Web pages. This method has enabled users to zip through the Web and quickly find significant information. Since the Internet has much low-quality information, Messrs. Sergey Brin and Larry Page, Google's co-founders, helped solve a significant problem.
However, the world of enterprise desktop and intranet search is very different from the Internet search world. Business users are focused on specific needs and not general "search" capability. Mutual fund managers are interested in searching Securities and Exchange Commission EC filings; lawyers are interested in searching electronic evidence; newspaper editors are interested in searching image databases; IT power users and forensic investigators want to search the registry, etc. It's doubtful if Google's ranking method would be applicable in this space. A user in a large consulting company, searching for a previous internal report, would be interested in keyword, synonym, or concept searches, not necessarily how many people already referenced the report. In addition, specific search capabilities already are available for each of these applications and many others. DtSearch is one company that offers both end-user and embedded search applications.
If Google is seriously interested in the enterprise market, the firm will have to create a more significant offering. It will need to offer an internal-network search like dtSearch already does. It should offer advanced concept search capability, like dtSearch, WizSoft, and DolphinSearch already do. It will need to provide a smart interface for vertical-industry business applications. Google has significant search know-how that could be profitably used to create an engine for a vertical-industry search product.
For now, Google is still searching for a compelling enterprise search offering.
Question C: What does a CIO have to do to establish a leadership-development program for the IT organization?
Our advice: CIOs today, as throughout their history, face both new and constant challenges to their success. Working in today's enterprise, with its constantly changing demands, organizational structures, and even outsourcing, requires leadership capabilities throughout the IT organization. Setting an IT strategy, including alignment with the business, requires the interpersonal skills of effective leaders. Achieving extraordinary performance and delivering results are the responsibility of the CIO, but aren't done by the CIO alone. And when the CIO thinks about what kind of legacy should be left behind, it won't be the technical architecture or applications portfolio, but the IT organization itself that others will point to.
The significant objectives, therefore, of a CIO today are to create effective teamwork within the IT organization as well as with their clients, to improve the project- and program-management capabilities, including risk management, to transform the IT organization to support the new business models of the enterprise, and, last but not least, to achieve the much-sought-after alignment with the business. The common denominator of these objectives is effective leadership throughout the IT organization, but if the only leader is the CIO, the organization is in trouble.
Role Of The CIO
The role of the CIO in a leadership-development program is simple to identify, but takes a commitment by him or her to succeed. The CIO needs to:
The target audiences for a leadership development program are the CIO's direct reports, IT middle management, and the early career and high-potential people relatively new to the organization. Of course, the scope of such a program will vary according to the size of the IT organization, as will the considerations for use of complementary programs both internal and external to the company.
A leadership-development program has many similarities to project-management-training programs. Both typically have multiple sessions over an extended period of time. Mentors are essential to guide the participants through some learning points. As the participants go through the program, they encounter progressive degrees of complexity. To apply the lessons learned takes much practice, and many of the metrics of success are relatively "soft" but are results oriented.
The scope of the leadership-development curriculum varies according to which audience is targeted. The range of attitudes will go from "I'm already an established leader" (often the CIO's direct reports) to "What a great program. When do I start?" (the early career types). These run the gamut of experience, mind-sets, and even maturity. Internal politics also will need to be addressed. Some form of job rotations will be helpful, with the cycles varying according to which group is involved.
The metrics of success the CIO should use include:
In many ways, and with effective communication, the CIO will know the difference. It will be obvious as long as he or she really understands from the beginning what his or her objectives are for the program itself.
Please keep in mind a quote I've modified from a previous employer:
"You don't develop the organization. You develop the people. The people develop the organization. It's done successfully no other way!"
Wes Melling, TAC Expert, has more than 40 years of IT experience with a focus on enterprise IT strategies. He is founder and principal of Value Chain Advisors, a consulting boutique specializing in manufacturing supply-chain optimization. He has been a corporate CIO, a Gartner analyst, and a product strategist at increasingly senior levels.
Frederick Scholl, TAC Expert, has more than 25 years of experience in networks. Since 1991 he has been consulting on information assurance: application performance, reliability and security. Projects have included: developing network architectures and standards; testing and modeling network and application performance and reliability; and creating security policies. He's also active in the area of Internet investigations, working for law firms on a variety of legal matters that include networks and applications.
Bart Bolton, TAC Thought Leader, has been developing and facilitating leadership-development programs, with more than 400 graduates, for various clients for the past 10 years. He is a multifaceted information systems executive with more than 35 years' experience in the field of information-systems management.