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HP Goes All In With An IT Transformation

Even with the economy in a fierce downturn, HP CIO Randy Mott preaches a high-risk, capital-intensive approach to transforming IT operations. But will other CIOs follow his lead?
A NEW SHAPE FOR THE IT BUDGET
So does Mott's vision for transformation make sense in your company? And where are CIOs likely to meet the most resistance?

Mott's most convincing when he talks about "changing the shape of the IT budget, not just the size of it." Business technology organizations went through radical change in the last economic downturn, as large chunks of work that were done in-house were sent to offshore outsourcing companies. Yet for all the talk of moving routine IT work offshore to focus people on more innovative new project work, companies still struggle to devote enough firepower to innovation. Mott lays out a compelling strategy, heavy on IT process automation and standardization and reduction of applications.

One of the critical pieces many companies are missing is Mott's concept of the revenue of IT. The challenge will be to get business units to spend the time and make the commitment to quantify those benefits, the way HP does, in a way that has the standing of revenue.

The hardest sell of all is Mott's approach that "choosing is losing." Rather than present something as a three-year transformation, most CIOs will knock off these projects incrementally, even if they have a vision for how they'll work together. That approach will deliver benefits, Mott acknowledges, but for an IT group to change the company's edge over competitors--to "be the benchmark," as Hurd tells Mott--means taking on all IT's weak spots at once.

Understand that Mott isn't advocating a Big Bang approach that doesn't yield results until everything's done in three years. HP's effort started lowering costs throughout those three years, with benefits delivered incrementally even as IT spending was lowered from 4% of revenue to 2%. But even with that approach, CEOs will be wary of something billed as a three-year transformation that comes with a big capital cost.

Even those CIOs willing to take on a high-risk, high-reward, capital-intensive IT transformation in this economy are likely to run into an executive committee that would rather hedge its bets. No one said it would be easy.

Continue to the sidebars:
The Metrics That Matter Most
and
Three Mistakes HP Made, And One It Didn't

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