Global CIO: General Motors Ex-CIO Predicts Return To Growth
Can IT teams kick it out of cost-cutting mode?
The IT agenda for the past year has been dominated by cost cutting. Ralph Szygenda, who was CIO of General Motors until last fall, thinks it has dominated IT strategy for a lot longer than that. More like the last five years, maybe even the past ten.
More importantly, Szygenda thinks that's on the verge of change, a change that will shift the focus toward growth. It's a very macro prediction, based on a whole lot more instinct and experience than economics. But it's the instincts of someone who bought more than $30 billion worth of business IT the past decade.
Looking back on business IT's accomplishments this last decade, Szygenda sees most of the effort was around efficiency: virtualize and consolidate data centers, use less power, use fewer apps, outsource IT, hire fewer people. Szygenda, himself a hard-nosed cost cutter at GM, doesn't think IT and companies overall have a lot of room left to impress shareholders with cost cutting.
"It's hard to go back to the board of directors and say 'I'm going to bring more efficiency in,' which is what you've been selling at analyst meetings for the last five years," he says.
Looking ahead, he thinks the most intense pressure will center on driving revenue growth. For business IT teams, that means more focus on things like building IT into products, delivering apps that spur speed and creativity in new product development, or on apps that deliver direct customer benefits, like quicker delivery.
It's one man's call, a man who now has a stake in the growth message being right. Having spent 20 years buying IT as a CIO, Szygenda now is working with a couple software companies. He's working as a consultant to iRise, which makes visualization software that allows prototyping apps before they're built, and as a board member for Compuware, which does application performance management. Szygenda says his personal interest is the point--that his macro outlook is why he picked these vendors to work with, because they'll benefit if companies deploy and build more apps to differentiate and innovate.
"I'll be right or wrong, but I'm betting my future work effort on that innovation, not efficiency," he says.
Szygenda's not predicting a return to the wild IT spending days of the Internet boom. But he does think that period, from around 1999 to 2001, was the last big surge of IT-led business innovation, and that innovation's due for a rebound. "You're at the bottom of the CIO budget cuts," he predicts.
Does Szygenda have it right? I think he's right about the pressure, how it will increase on companies to deliver revenue growth and punish those that don't. But it will come in a macroeconomic environment where growth is hard to come by. And on an individual company level, I think it's harder than he suggests for IT teams to kick into growth mode.
Too many companies don't consider IT a vital part of the growth engine, and IT teams tend to agree; our data shows it's a clear minority of IT teams who see products and revenue as their priorities. Also, IT teams battered by those five years of budget cuts are struggling to keep the lights on, and have lost many people who understood the business processes enough to help make them more profitable. At many companies, the odds are stacked against IT playing a key role in driving growth. It'll take powerful CIO leadership to change that thinking.
The best IT teams will find ways to do that. Look at the companies I've written about recently: UPS building its next-generation handheld device for drivers, which should let it offer more customized deliveries; or GM itself, making smartphone apps its hopes will help sell people on its upcoming electric car, the Volt. These are the stories I'll keep telling, because they're examples of this growth mindset.
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. We've got a management crisis right now, and we've also got an engagement crisis. Could the two be linked? Tune in for the next installment of IT Life Radio, Wednesday May 20th at 3PM ET to find out.