IT sourcing strategy guide for enterprise CIOs
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As the CIO at GM, Jim Noble focused his technology strategy on quality. As the CIO at British Petroleum his focus was on safety. Today, he is focused on guiding other CIOs toward positive business outcomes. His upcoming book, The CIO's Secret Playbook, promises to help CIOs, in Noble's words, "save their companies a fortune" with street smarts and a keen emphasis on driving business results with technology. In this CIO Innovators Q&A, Noble, who will be a keynote speaker at next week's World BPO/ITO Forum in New York City, July 17-18, also talks about the changing business process outsourcing landscape.
You held the CIO position at several global companies across many industries: General Motors Co., AOL Time Warner, Talisman Energy Inc. …. How would you approach business process outsourcing as a CIO today?
Jim Noble: I would focus less on cost than I did in the past. Outsourcing was synonymous with offshoring, and offshoring was synonymous with labor arbitration. You would send the work to a low-cost country, and that really didn't play out terribly well. The quality of the work and management of the work was a challenge, and it tended to be the lowest common denominator.
Today, I would put much more emphasis on transformational outsourcing. If my company wanted to enter a new market, or develop a new product, or have a different segmentation, then speed to market would be the key driver in finding a sourcing partner. If you wanted to move to e-commerce from physical sales, for example, then you have an opportunity to partner with a third party that can bring you best practices, do it quickly with a SaaS [Software as a Service] solution, and you don't have to build a data center over the next 18 months. You don't have to invent the working practices because you will embrace the third party's approach. I would tend to use sourcing strategy more on a go-to-market ticket rather than on a cost-reduction ticket.
What would you have done differently during your time as a CIO, knowing what you know today?
Noble: I would have focused more on taking accountability for business outcomes. The black box of the IT function can be an input or an output, and CIOs generally tended to be order takers. We tended to focus on silent running, smoother operations. We tended to automate the business process and sometimes we made bad things happen faster. That was mostly an input focus. I wish we had stood up and taken responsibility for business results with all of these initiatives.
Historically we found a lot of excuses -- it's a business initiative, not an IT initiative -- and therefore we said the business people are the only ones that can take accountability for success. That was more of a smokescreen than a reality. We should have adopted the two-in-a-box model, where the business and IT leaders oversee the execution of the initiative and accountability of it and are rewarded in their compensation for the result. In the olden days, we used to say, "'But the result is years away'," and that was our biggest mistake.
Today, if you said the business result is years away so I can't take accountability, they would laugh at you. The result needs to be six months away, and in six months, if you can't stand up and be counted, then more fool you. Even when CIOs were aligning IT to business initiatives -- running IT as a business as it was called -- IT was run on cost. Now we should be running IT as a business-on-business-outcome grounds.
I would have focused more on taking accountability for business outcomes.
Can you share one of the secret's that will be published in your upcoming book, The CIO's Secret Playbook?
Noble: Discover the single most important issue for your CEO or executive committee and find a technology enabler. If you're in a manufacturing company, the key issue can be quality, as it was for me in General Motors. If you're in a process company, the key issue could be unplanned business outages. If you are with an energy company, the issue could be safety, as it was for me at BP and Talisman.
Once you're convinced that you've latched onto the winning idea, then you use all your street smarts to get one business to pilot the idea and make the other business envious of that success and have them want to jump on the bandwagon. You can trick them by allowing the early adopters to go to the head of the line with equipment refreshes or the most modern smartphones. You give them the goodies and they willingly embrace this, but that's what I mean by being street smart. You coax one of your lines of business to be the exemplar, and then the others watch and want to follow.
Information technology outsourcing and business process outsourcing seem to be yesterday's news, and cloud is today's news. What is your perception?
Noble: Companies still want to focus on their core activities in-house and find third parties that can do the noncore stuff faster, better and cheaper. We used to do that via a lot of RFIs and RFPs and exhausting contract negotiations to come up with five-year deals. Now, cloud and Web services allow us to do what we always really wanted to do, which was out-task, rather than outsource.
The shift is that the client organization now has to become a systems integrator rather than rely on a third party to put all the pieces together. That's where cloud comes in. Cloud, Web services and SOA [service-oriented architecture] are ideas that have been around for quite some time. Cloud was invented in telecommunications, and we stopped talking about point-to-point and we started talking about connecting to the cloud -- which was the telecommunications cloud -- and that concept of Web services and SOA has been around for a decade and it's only now becoming viable.
There is a saying, "As ITO goes, BPO will surely follow." What do you see as the future of business process outsourcing?
Noble: That saying is true. The client company has to be the orchestrator of multiple boutique suppliers. Whether these today are IT suppliers -- and the client is piecing together an infrastructure supplier with an applications developer, with an applications management supplier, with a call-center supplier -- in IT, it is becoming commonplace for the client to become the systems integrator. If you map that to the business process world, the client has to become the service integrator, so the term SI is usually understood to be a technical term. But, in the future this term will mean service integrator, and the service will be orchestrated with the other processes in that client's business.
Given these market shifts, what should be the response of the big ITO/BPO service providers?
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Strategic outsourcing challenges
Noble: It's a sea change for them. They have to help their clients transition from the old to the new way. With the new BPO, everything is a service. So, back to SOA and Web services. The cloud up until now has been really for nonproduction activities like development, testing and backup. Going forward, it has to be industrial strength. It has to be good for production.
Even now, it's really hard to get SLAs [service-level agreements] and operating-level agreements with cloud suppliers that are industrial strength. The big service providers can fill that need in the market [for industrial-strength production activities] by committing to business outcomes such as gain share, risk/reward or being committed to consequences. That's a big shift for them because they used to be providers of business input. In the future, I think they can be committed to outcomes and win the trust of their clients by being easy to do business with. And they wouldn't be marginalized as commodity providers.
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