Q&A: CIO Focus on IT Business Value

REDMOND, Wash., Oct. 7, 2004 — Top IT imperatives at this year’s Senior IT Officers (SITO) Summit included the more-for-less economy, protecting IT investment, new rules for alliance and alignment, and better measures for better results.

Emerging from a difficult stretch of a few years marked by IT budget-cuts and staff reductions, more than 100 CIOs joined Microsoft at SITO here last week to continue the dialogue around the role of the CIO in delivering real business value. Discussions with CIO leaders reflected the evolving role of the CIO, improved business climate and renewed IT investment, contributing to overall optimism on the part of CIOs as well as Microsoft and its industry partners.

Following the SITO conference, PressPass met with Microsoft executives Kevin Johnson , Group Vice President, Worldwide Sales, Marketing & Services, and Ron Markezich , Microsoft’s own CIO, to discuss their impressions of the conference and their sense of the work that lies ahead for CIOs.

Kevin Johnson, Group Vice President, Worldwide Sales, Marketing and Services

PressPass: What do you hear from CIOs about their current priorities? What issues were top of mind at SITO?

Johnson: We’ve been talking a lot about the challenges of the CIO — the economic pressures, the tough tradeoffs that have been made, creating better measures that lead to better results, and business effectiveness of IT investment. These topics surface in most IT discussions with CIOs, reinforcing our commitment to product quality and innovation in ways that increase the value we deliver to customers.

Markezich: What was striking to me was how companies are very willing and eager to invest in IT right now. It’s refreshing to hear, and clearly illustrates how the environment is changing in terms of focusing not so much on “slashing” costs, but rather understanding how to get the most value out of the IT investments and ensuring that there is the framework in place so that the investment goes to the right places and gives the right value.

There also were many good ideas on how to use IT to drive a strategic advantage, particularly around operational excellence and governance.

CIOs are really looking to drive down the costs of running the business so they can look at how to reinvest into other areas that add business value. They’re asking, what can I do to achieve the highest level of operational excellence? How can I drive out costs and drive up our service levels? To these points, we talked a lot about how Microsoft IT has used the 2003 wave of products from Microsoft — Windows Server 2003, Exchange Server 2003 and the Microsoft Office System — to drive down Microsoft sustainer spend, and Microsoft Operations Framework (MOF) to standardize our IT processes.

We also participated in discussions around internal controls, Sarbanes-Oxley compliance, business connection, and value realization. These were top of mind, brought up frequently in the roundtables and many of the conversations I had with other CIOs.

Governance plays an important role as CIOs ask, what’s my framework for insuring that the right priorities are invested in? How do I insure that I realize the value from those investments after they’ve been made? How do I insure the overall effectiveness and use of technology in my company? How do I identify and manage risk?

PressPass: With the improvement in the business climate, CIOs must feel a sense of relief. But what are they seeing on the horizon?

Johnson: CIOs have a unique role within their enterprises. Their portfolio encompasses the entire company; they have a global view that only a few others have. We believe we have as much to learn about the needs of the enterprise by listening to them as we do by talking to CEOs. Microsoft is listening to CIOs and is very aggressively developing strategies to meet their needs.

CIOs are renewing IT investments with an eye to expanding the perspective of how IT can support the business. Business integrity will always be important, but the need for growth is inspiring many CIOs to think strategically and forge new partnerships within their companies.

They are committed to understanding the business in a comprehensive way, building their credibility on a solid foundation of delivery.

PressPass: With CIOs taking on a broader business role in their organizations, how are Microsoft and other companies changing the ways they do business with CIOs?

Johnson: We respect the deep understanding our customers have of their industries and we’re learning from them. The CIO of a research university is not only a technology expert. He or she also has tremendous insight into the core imperatives of an institution of higher education. By taking time and investing the necessary resources to learn various industries and specific companies, we’re increasing our understanding of the challenges CIOs face individually and collectively, and we’re doing a better and better job of delivering business solutions with our partners designed to address those issues.

Ron Markezich, Chief Information Officer

Markezich: I heard from a number of CIOs who said they are using Microsoft for mission-critical systems extensively and are excited about the scalability, integration and reliability of our core products. Many were recognizing the benefit of getting our most recent products deployed aggressively and very early so they can start realizing value from those products right away. This has been our strategy at Microsoft and we share best practices for aggressive software deployments.

Many CIOs also expressed to me that they were very excited about Microsoft SQL Server 2005, which will be coming out next year. They’re looking at using it for business intelligence capabilities that they’re being asked to provide across the business.

This was also true for Microsoft Visual Studio System 2005, as many of the CIOs we spoke to have large companies where packaged products can’t meet all of their needs. They have to do some custom development and Visual Studio System 2005 is going to allow them to develop in quicker timelines and even to build in some of their internal controls into the development tool suite to insure that they have governance across the applications being developed.

PressPass: Among the other issues discussed at the conference must have been security, which is still a pressing priority for most CIOs. How is Microsoft helping CIOs protect their IT investment?

Markezich: When I talk to CIOs, I usually discuss how we’re solving problems inside Microsoft, the same problems they may have. Windows XP SP2 has been important for us to lower the risk profile of our desktops. We began deployment in late December and early January, and just prior to the release, nearly every Microsoft worker was working on SP2.

We’ve also deployed Internet Protocol Stack (IPSec) across our entire enterprise, which allows us to define a network segmentation boundary around our corporate network providing us an extra layer of protection. Again, that lowers our security risk. Then we talk about patch management. System Management Server 2003 is what we use to deploy software, including patches, to all of our machines across Microsoft. Most of the CIOs I’ve talked to are either using SMS 2003 or planning to use it for software and patch distribution across their machines.

PressPass: You noted the trend to CIOs regarding the strategic use of IT as a key element in driving revenue growth. Where does Microsoft fit in this scenario?

Markezich: From an internal IT perspective, we will drive down what we call our sustainer costs, which are what we spend to keep our systems running. Supporting line of business applications, running e-mail, our networks, data centers and so on. We’ll take those sustainer costs down by about $100 million over the course of three years. We’re now half way into the program.

We’re taking that money and investing in new builder activities that will help drive customer satisfaction, help drive revenue, help drive attraction and retention of talented people, help drive product time-to-market. And this kind of result can be reproduced by the CIOs we’re working with without having to increase the overall IT spend.

PressPass: It sounds like CIOs and Microsoft benefit mutually through collaboration. Is this what made the SITO conference important?

Johnson: The SITO conference is an important way for us to build stronger collaborative relationships with CIOs. It’s a forum for frank discussions about the real-world needs of CIOs and how Microsoft can improve the products and services they rely on for their success and the success of their enterprises. CIOs and Microsoft are headed in the same direction. The ongoing dialogue will help us achieve our shared goal of innovating for greater business value.

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