For many companies, business transformation is no longer the exception but the norm. Such fundamental change — whether a move into a new sector, an acquisition-driven change or an overhaul of the company’s cost base — impacts all operational areas, not least of all IT. In fact, in recent times the new opportunities offered by information and communication technologies have often been the trigger for such corporate transformation. So what does the need to support continual change mean for the CIO?

In the first of a new series, two technology industry thought-leaders — Dr. Norbert Kleinjohann, CIO of electronics and electrical engineering giant Siemens AG, and Rolf Schwirz, CEO of Fujitsu Technology Solutions — recently sat down to weigh up some of the key challenges.

CIOs as agents of change

Dr. Norbert Kleinjohann: I have a critical view of the role of the CIO here: a CIO should never regard himself or herself as a driver of change but rather as a moderator or enabler of it. Of course, as CIOs we are also in a position to inform our company of new opportunities. However, that can only occur if there is a close alignment to the business. In my career, I have seen IT departments implement things that their companies did not necessarily need. The original requirement must be clear, and come directly from, and be linked to, the business. In other words, the CIO must not be the one to generate the original need, as may have occasionally been the case. My philosophy is very simple: IT should be brought as close to the business as possible. That means joint decisions being made between the operational CEOs and the relevant CIOs.

Rolf Schwirz: The most successful companies have been those that have managed to position IT and the business alongside one another in the precise manner you’re describing. Even today, one rarely finds qualified IT experts on companies’ executive management teams. Their expertise is more typically focused in the classic IT department. However, the companies that have successfully implemented the biggest changes have only been able to do so because of the understanding that has been reached between these two parts of the organization.This has involved the CIO offering guidance on the directions in which technology is developing and the new possibilities that are arising. That has allowed the management team to plan for how this could fit with the company’s actual needs within the scope of its strategic considerations. At other times, the CIO simply inspires the management to adopt a brand new technology.

Dr. Kleinjohann: A company’s CIO organization no longer has the classic role as “IT deliverer” only. Instead, it becomes the enabler for IT’s intelligent implementation. If we look back to the 1980s, IT used to just buy tools: computers, operating systems, programming languages. There were no real enterprise solutions; you had to build everything yourself. The understanding of the role was completely different. Now, the IT department and the CIO have become pathfinders for the best use of technology. In a situation of change, this has demanded they become change enablers or even change managers. However, the culture that existed in the days when IT departments had to discover everything for themselves is not one that will simply disappear.

Business priorities

Rolf Schwirz: From my perspective [as a former Siemens manager and now a business partner to the company], the strong, regional structure of Siemens AG has always been a major determining factor in its organizational development. Now, the new management team believes it needs to go beyond country borders and view the business on the basis of types of business, customer segments and industries. Such organizational transformation is only possible because the IT department is now in a situation to support it. In the days you are describing, in which the IT department was practically still building technology, this simply would not have been possible.

Dr. Kleinjohann: The basic principle of “vertical global entrepreneurship” over “matrix responsibility within countries” already existed [in the company]; it is just that the rules of the game and priorities at Siemens have now been more clearly defined. However, it is true that the IT department is now far more able to turn the idea of such transformations into reality. The most recent example is the implementation of a fourth business sector at Siemens [Infrastructure & Cities] to supplement the existing core sectors of Industry, Energy and Healthcare. Naturally, this decision was not foreseeable when we originally planned our IT resources. Despite this, we are still able to implement the change within the shortest of times. And that is far from simple. There are many teething problems, but we will succeed.

Rolf Schwirz: That is precisely what I mean: without already knowing about it a year in advance and being able to plan and prepare for it, such performance was only possible because you had already developed an agile and flexible IT architecture with the buy-in of all the operational staff.

Dr. Kleinjohann: We are continuously improving a whole array of things within the architecture in terms of agility and flexibility. To put it simply, the plan is to achieve a certain level of modularity in the architectures, to ensure the individual components should be as change-resistant as possible. That not only applies to the IT infrastructure, which should remain unaffected by organizational changes, but also to the needs of the individual end users. In the past, standardizationat the end-user level was widely applied; today, though, you are no longer able to do this. A certain level of standardization remains necessary but this is achieved via specific individual components. Each component is highly standardized but the ability to combine them gives rise to an abundance that can fulfil many different needs.

Standardization via the cloud  

Dr. Kleinjohann: The many things that need to be standardized in the company should no longer occur in the end device, but in the cloud — and if that is not possible, they should at least be installed from the cloud. Previously, the idea was that the 400,000 people at Siemens were to have standard PCs that differed by way of certain business applications. This was the right concept 10 or 15 years ago but is no longer tenable today. The employees, especially those from the younger generation, have their own ideas about how to work and want end devices to have certain different features or flavors. The entire topic of mobile working has taken on a completely different dimension today compared to a decade ago. We therefore try to eliminate as many fixed elements as possible from end-user equipment. This will not happen overnight, but our new architecture, which we are gradually implementing with new services, is fully supporting the process.

Rolf Schwirz: Cloud computing can help here; at the end of the day, pay-per-use instead of upfront payment is the approach of cloud computing. How seriously are software providers following this path? Will they actually cannibalize their existing and very successful business models? We see it as our role to support customers’ moves to these new cloud architectures and services. And we can, because, with the exception of Japan, we are not in the software business. This means we do have the expertise to go into the cloud and develop such offers without the rug being pulled from under our feet.

Dr. Kleinjohann: Viewed from a long-term perspective, the regular release model represents a cost burden with no real value — and that is now placing more and more pressure on the entire [software] sector.

Rolf Schwirz: That is not the only thing that cloud computing could change; it could also change the entire procurement model. Previously, tools and hardware were purchased as pre-investments. Customer payments were actually issued against future invoices. Large sections of the IT industry still work in this way. However, to support their customers’ transformation and change processes, IT companies must undergo change themselves: they need to develop more flexibility in their business models and a comprehensive range of combination options for infrastructure products and services. At Fujitsu, cloud computing has ideally prepared us for the changes. We have the skills that support a solutions business and the expertise for the supply models used in the cloud — without having to jeopardize our business model.

Dr. Kleinjohann: For suppliers that do not have to break their existing business models, the changes offer more opportunities than risks. And for us, the new [cloud computing] approaches increase our overall flexibility — which is precisely what we need to successfully [support] change processes.

Fujitsu Forum 2011

Munich, November 9 & 10
Rolf Schwirz, CEO of Fujitsu Technology Solutions, will use his keynote speech at Fujitsu Forum 2011 to outline compelling strategies for “Reshaping IT” — the conference’s main theme.