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Microsoft CIO Tony Scott predicts big changes ahead for CIO role

Microsoft CIO Tony Scott predicts 2010 will usher in big changes for CIOs, starting with "unprecedented demand" for IT and the expansion of the CIO role to business operations.

To listen to Microsoft CIO Tony Scott, you'd think all hell is about to break loose for CIOs -- and the CIO role. With many companies watching the economic crisis recede in the rearview mirror, the biggest problem facing CIOs in 2010, according to Scott, will be dealing with "unprecedented demand." Like water rising over a dam, the pent-up backlog is threatening to overwhelm CIOs, he said. In fact, for a group of executives who have been under pressure to streamline, cut, boost and automate since Y2K, figuring out how to manage in a big-growth era will tax all their skills as CIOs--and then some.

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"How many of us in our organizations remember how to grow? It's been a while. We know how to add capacity, because we've been doing that. But I am talking about big growth. I see it coming right around the corner," Scott said. The growth will challenge every aspect of the CIO job, from finding IT talent to governance, he said.

A keynote speaker at the Mass Technology Leadership Council Growth Summit: A New Paradigm for CIOs, Scott said many of the CIOs he talks to are experiencing the sea change already, citing a statistic from McKinsey & Co. that 46% of CIOs now report that spending is "looking up." The downturn has "flushed out the weak players," he said, adding that the survivors have picked up market share and are looking where to go next and how to grow. In his view, the first place business looks to for help is IT. Cloud computing will be "one answer" for meeting that demand, he added.

Scott said he recently got a one-sentence memo from Microsoft CEO Steve Ballmer, asking when all of Microsoft's applications would be moved to the cloud. He said his first reaction was to say, "never," or "only after a big increase in budget." But in fact, his team wrote a "thoughtful response," he said. That analysis has become the platform for plotting a cloud strategy for applications. First up are applications for which the demand is highly variable, and large hardware commitments, such as the ordering systems where "absolutely nothing" happens until the mayhem of last-minute ordering, he said. Likewise, he said, demand for HR systems "is zip" until the last two weeks of the year, when employee evaluations are due. Putting these applications into the cloud would allow them to virtually scale through their lifecycles, he added.

The role of the CIO is the business these days

As businesses of all stripes increasingly make products that are IT-enabled, CIOs will spend more time with customers, learning how customers behave and how they use the products, Scott predicted.

As the analog world gives way to digital world, the role of the CIO is the business these days, Scott said. In particular, business operations are becoming highly intertwined with IT and with data; and for some businesses, the CIO will be the CEO, he predicted. He also sees the roles of CIO and chief operating officer (COO) increasingly overlapping.

Microsoft "still has a very large operations business," that worries about packaging goods to sell in stores, Scott said. But that is fast becoming an old model. Products can as easily be downloaded, and with that distribution model come all kinds of complexity, including the thorny accounting issue of revenue recognition in a digital market, he said.

"Understanding all the complexity of this means that the CIO and the person who runs operations have to be like this," Scott said, holding up two intertwined fingers. He went on to say that companies pretty soon will decide they just need one person in the role. That is good news for CIOs who have business skills and acumen, but the paradigm shift may not bode for well for those who don't, he added. And the paradigm shift cuts both ways: The usual characters who once had high visibility in the business for identifying problems or friction, are clueless now as processes become automated. The job of the CIO is to hold a mirror up to the friction in the now-automated processes and challenge the business to do things better, he said.

The point seemed to resonate with Matt Hooper, CIO of IT services provider Inforonics LLC in Littleton, Mass., who is also his company's vice president of marketing services. "If a CIO is not a business architect and they are not focused on services, yes, they will be displaced." he said. He pondered the question of whether the dichotomy between business leader and CIO, or between business operations and delivery of information, will go away as the current generation makes up more of the workforce and rises to management positions.

Inside out to outside in

Scott said he has always spent a sizeable chunk of his time with Microsoft product groups. That makes sense because his IT organization runs its Tier 1 applications using Microsoft beta technology. In addition, however, he has started to sound out Microsoft's external customers, recently spending four hours side by side with a Microsoft customer service representative, he said.

How many of us in our organizations remember how to grow? It's been a while.
Tony Scott
"If you haven't done it, go sit in a call center and listen to customers calling in," Scott said, claiming to have learned more in four hours than he would have in 10 years about certain products. "Customer service people know things about products that product development doesn't know."

During Scott's four-hour stint, for example, a customer called in wanting to know how to install the product keys for several products. The trouble was that one product referred to these keys (which software manufacturers use to ensure their products are purchased legally) as "product keys," another called them "license keys," and yet another didn't appear to have any keys. While Scott searched the Microsoft website to retrieve answers, the call center rep explained the discrepancies, including the fact that the product keys were actually embedded in one of the products the customer had. These are the kinds of interactions that are not easily captured in coded applications, and never make it back to product development, Scott said.

Scott's call center drop-in is not a one-time deal. He plans to keep doing it as a way of dealing with the shift from traditional manufacturing -- where the products are developed inside and marketed out to customers -- to the digital age, where it is "all about out-to-in," he said.

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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