CIOs Uncensored: HP's Mott Goes For Broke, Seeks 80/20 Reversal
Shifting more tech dollars to game-changing projects and products is on the to-do lists of most CIOs. But few are willing to put it in writing--and even fewer are willing to go so far so fast.
You've all seen those commercials where some has-been actor brags about losing 100 pounds in a couple of months, all because of an amazing diet regimen. Then, of course, comes the fine print: "Results not typical."
That same fine print will need to go at the bottom of Randy Mott's report to the Hewlett-Packard board of directors, assuming his IT organization can deliver on its promise: Shift 80% of staff resources to new projects and focus only 20% on maintenance--all by 2009. Mott's goal represents a reversal of the standard 80/20 rule and a considerable improvement over the HP IT organization's current 54/46 ratio of new/legacy IT work.
While shifting more tech dollars to game-changing projects and products is on the to-do lists of most CIOs, few put it in writing--and even fewer are willing to go so far so fast. But few CIOs have Randy Mott's record. He is a master at wringing out supply chain efficiency and building huge data warehouses that pinpoint customer needs and sales opportunities. As CIO at Wal-Mart and then Dell during their high-growth periods, Mott wasn't just in the right place at the right time. He drove growth through IT innovation and a "let's not waste time" culture.
Part of Mott's MO is the standard stuff of business-IT alignment: He works closely with line-of-business execs and has the ear of the CEO. But he also sets the bar high for his IT organization. At HP, he's consolidating 100 worldwide work sites to 29, cutting the number of applications in use from 5,000 to 1,500, and collapsing 85 data centers into six. He's also reducing IT staff to 8,000, from 19,000 when he took the CIO job last summer. Talk about a weight-loss plan! With that kind of trimming, automation will be critical.
But with mergers, globalization, regulatory compliance, and so many other issues on CIOs' agendas, is it fair to expect them to keep the legacy infrastructure humming at a fraction of the cost? Mott acknowledges it's tough. "We are trying to get on a path of global and common applications to where we can focus on new capabilities, new features, and new functions," he says. "If you could wave a magic wand, it would be great. But we underestimate as an industry just how much of a distraction that is. We've put some very aggressive goals in front of our people to manage our way out of that."
In other words, you'll never make a dent in the old 80/20 machine unless you try.
InformationWeek 500 organizations say they're doing better than most, spending, on average, only 60% of their IT budgets on ongoing maintenance. At General Motors (No. 114), part of reversing 80/20 means standardizing processes and systems worldwide. "Most IT companies do not run globally," says CIO Ralph Szygenda."We have worked to use the same processes in every part of the world and have one way to manage GM business anywhere."
That effort includes GM's six top IT outsourcing partners. It also means working in real time. "There's no time to take off and do maintenance or to go and analyze a problem," says Szygenda, who adds that decision-making for the CIO is "instantaneous." Typical? Hardly.
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.