IT outsourcing contracts merit review given scandal at Indian firm

“Satyam scandal will have ramifications across the industry if Satyam customers flee and take their business to other IT outsourcers”

Rachel Lebeaux of Search CIO writes in her latest reporting that Customers of any IT outsourcer that runs into trouble should consider renegotiating their IT outsourcing contract, and make sure they have the documentation and staffing needed to take their business elsewhere, experts said this week in the wake of the financial scandal at Indian IT services firm Satyam Computer Services Ltd.

She further goes on to say that "even if a crisis is limited to one provider, CIOs with any outsourcing contracts have work to do, to make sure their projects or levels of service are uninterrupted."

News broke last week that Satyam, a 22-year-old global IT services firm based in Hyderabad, India, had been listing assets far in excess of what it actually held, a scandal that has been referred to by some as "India's Enron." The "financial irregularities," disclosed by the firm's founder, were followed by other allegations. The company denies these charges.

Source: SearchCIO

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Business process improvement tops IT '09 agenda, say Gartner, IT execs

“CIOs are essentially going to have the same resources as last year to address a whole new range of problems.”

Enterprise IT budgets in 2009 are nearly flat, and CIOs must drive business process improvement while creatively using existing resources to advance their organizations' agendas.

So says the latest research from Gartner Inc., a Stamford, Conn.-based consultancy, as well as interviews with CIOs, who put business process improvement atop their agenda for 2009. Today, Gartner releases the results of its 2009 CIO Agenda survey, which took the pulse of more than 1,500 CIOs between Sept. 15 -- just as news of Lehman Brothers Holdings Inc.'s bankruptcy filing broke and stock markets subsequently tumbled -- and Dec. 15, 2008

The survey finds that IT budgets in 2009 will rise, but by such a miniscule percentage -- .16% -- as to be considered flat.

Therefore, organizations are not slashing their IT budgets wholesale -- "in fact, they are using IT to change the way the company works, to make it more effective and efficient," said Mark McDonald, a group vice president at Gartner and author of the study. "CIOs are essentially going to have the same resources as last year to address a whole new range of problems."

The survey, which ranked CIOs' top priorities, found that "improving business processes" topped the list once again this year, with 57% naming it as a top concern. Following that was "reducing enterprise costs" with 51% and "improving enterprise workforce effectiveness," which was up three spots from last year and garnered 37%.

Those pretty much mirror the mandates for Kathy Schue, district technician for the Gresham-Barlow School District in Gresham, Ore. "With the budget downturn, our No. 1 priority in the coming year is finding efficiencies in all processes -- not only in the technology department with network infrastructure, but since this is education, we have teachers, administrators and everybody else," she said.

The school system serves 13,000 users, including staff, employees and students. Six people work in IT, and Schue says her department's budget is down close to 12%, making it all the more important to accomplish as much as possible with the resources it already has.

"We're analyzing how things are currently done, and finding out if there's a way to either automate them or use other tools we currently have, or invest in new tools if they show efficiency," Schue said.

For instance, the department has decided to build a database in-house for its work order system, and expand it down to the user level. "We figure it's saving us at least $20,000 just on implementation and development," Schue said. "We have very talented staff, and they're always wanting to learn new things, so we're making sure we're cross-training so, if we lose someone, we're not left in a hole with services not being maintained."

Randy Meyers, information security officer at Ithaca College in Ithaca, N.Y., said he certainly agreed with the top priorities cited in Gartner's survey. "We're obviously looking at things at a much more tactical level and figuring out what are the points of pain," he said.

There are about 1,500 faculty and staff members at Ithaca College, with about 75 working in IT. The school is looking at virtualization for consolidation of servers, as well as modernizing a lot of its infrastructure.

Although IT's budget is down a bit -- less than 5%, Meyers said -- the school is still following through on a three-year, multimillion-dollar network security rearchitecture.

"IT, historically, is not a budget priority, but people are starting to learn the value of IT," he said. "They can save time and money and energy on their end -- the business unit -- if their IT systems are good and efficient."

Schue said her school district is also following through on previous plans, such as a five-year desktop computer renewal plan. "With the rate that technology grows and changes, it's just not possible to get off that schedule," she said.

Schue said she also sees a positive attitude toward investing in IT despite the recession. For decision makers in the school district, "this has been a very big year for opening their eyes," she said. "They've never really paid attention to what IT does before. Now they're looking for efficiencies and ways to transform processes. They're looking more to IT for ideas, suggestions and implementations of new approaches. It's good for us."

IT restructuring includes focus on governance

For its part, Gartner is seeing organizations change their cost structures and use IT differently.

In particular, some companies are restructuring IT to make it more flexible, both in terms of costs and resources, to enhance the ability to do different kids of projects. "A lot of IT organizations are organized around specific IT assets -- ERP, CRM -- so when the business wants to make a change, it has to negotiate with multiple teams to accomplish a particular goal," McDonald said. "So we are now seeing a reorganization around processes and products, as opposed to around teams, to be more responsive to those needs."

For instance, Deutsche Bank AG has implemented a service delivery framework, which reflects a greater focus on products and processes and makes IT resources more flexible to move across individual processes and initiatives, McDonald said.

Intel Corp. has simplified its IT governance by eliminating multiple governance structures. It has established a formal application retirement initiative, and this year expects to eliminate more than 200 applications, McDonald said. In addition, staff is being reorganized so more people are working on development.

In the past several months, Carquest Corp., an auto-parts retailer, has put additional energy into simplifying its IT governance structure. "It needed to reprioritize its entire project portfolio to focus on essential projects first," McDonald said.

The report also recommends that enterprises "modernize," which will actually aid your organization's bottom line. If an organization's infrastructure is pre-2005, there are significant opportunities to provide more compute power at a lower average cost, and at a lower operating cost, he said. "The new price point for performance and capacity capability of hardware is significantly greater than it was in the past," McDonald said.

Source: Rachel Lebeaux, Associate Editor SearchCIO.com

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Bank chiefs face three tough issues

“3 pressing Issues for Incoming chief executives of investment banks Q407-2008”

How will they reward their best people?
Which growth bets are they going to take?
How can they control non-compensation costs, which have rocketed?

1. Compensation: Massive writedowns in fixed income and leveraged loan businesses have put staff bonuses under threat. But with some equity capital markets and mergers and acquisitions departments producing record revenues, banks must strike the right balance to keep top performers.

Upside: removal of department heads, holding departmental heads accountable, reshuffles are positive because group-think can set in during a downturn ...

2 Making the right bets: expectations of a full recovery in the credit markets but not until after 2008, banks and shareholders anticipate more growth next year and more (geographic (or) business) risk,

Upside: growth areas in emerging markets, non-debt related structured products and commodities ...

3 Controlling costs: in the past five years infrastructure cost (IT and Risk management) has rocketed. Fall in revenues exposes how much banks’ platform costs have increased. Big banks look to take ‘offshoring’ to the limit -- exporting costs to external providers, even Human Resources. Growth in emerging markets (Russia, Turkey and the Middle East) ...

Upside: constant investment and upgrades in infrastructure. Small banks considering giving more budgetary power to individual business units in order to impose cost controls more locally ...

Source: e-Financials News

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Change: The Only Constant

CIO Insight . January 2007 Research - Future of IT, outlines the top business, managerial and technology priorities for 2007. Customer Service levels drooped in 2006.

Strategic applications and technologies that can help boost service and revenues, such as business intelligence, will be especially important this year.

The report goes onto say there will be fewer graduates in IT, but the real revolution will happen as SOA (service oriented-architecture) and Web-services architectures bring new options. Here are the highlights of the research report:

1. Customer Service Surges as a Top Priority for 2007
2. Business Intelligence Tops the Strategic Technology List
3. CIOs Are Optimistic About Growth
4. The Business Environment in 2012
5. The IT Organisation in 2012
6. Security and Risk in 2012
7. Technologies in 2012

You may need to register on CIO Insight, link to full research

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