Anticipating 'Real' Recovery in IT

In Summary

• Who: Tom Murphy, CIO, AmerisourceBergen
• What: AmerisourceBergen is a $78 billion pharmaceutical services enterprise. Murphy’s IT organization, ABC Integrated Business Services, numbers 175. The team includes 100 IBM Strategic Outsourcing & System Integration members, as well as IBM SI and SAP Consulting resources. 
• Where: Valley Forge, Pa.; Orange, Calif.; Pune & Kolkata, India.
• Why: Murphy’s views on governance, social media and cloud computing reflect major shifts in the IT landscape. His advice? Use the year ahead to prepare an IT strategy that positions you to make the most of rapidly shifting cultural, technological and organizational needs.

New technologies are emerging at lightning pace. Economic pressures are bogging down strategic planning. Demand on IT is escalating to untenable levels. Sound daunting? Well, CIOs had better buckle up, because these are some of the challenges AmerisourceBergen CIO Tom Murphy sees on the horizon for 2011. Murphy, a former CIO at Royal Caribbean, is deep into a multiyear, multimillion-dollar SAP implementation at AmerisourceBergen, the $78 billion pharmaceutical services giant. He’s also looking to strengthen governance policies and go deeper into social networking and cloud computing. Murphy recently shared his predictions and priorities for 2011 with CIO Insight contributor Brian P. Watson. What follows is an edited, condensed version of their conversation.

CIO Insight: 2010 brought many challenges for CIOs. Will 2011 be a repeat?

Tom Murphy: I don’t see any significant change economically, at least in terms of the focus on “doing more with less.” But, looking ahead, the pressure to keep pace with technology growth is going to increase exponentially. How do you do that when you can barely get enough money to upgrade a server, let alone start looking at alternative sourcing, social networking, etc.? It’s going to add a lot of pressure.

And demand on IT from the business keeps going up. What does that mean for planning?

Murphy: CIOs need to have a well-understood, transparent governance process that controls the input of [business] demands. It’s very unsexy, but very important in being able to meet the demand. If you’re transparent about what it takes to run the day-to-day operation and what you’re working on that’s nondiscretionary, that leaves you with “X” time and resources for the discretionary. If you’ve put into place a solid governance model that engages the business in that conversation, they can understand where that demand is coming from.

[Businesspeople] are living under the same limitations, right? You’re trying to break the [impression] that IT has endless dollars to do anything. [Instead you want to say]: “Hey, business partner! You need to work with me to figure out what the highest priorities are in this organization, because these times of constrained resources are never going to change.”

It doesn’t necessarily take the pressure off, but it changes the pressure, and it helps to spread some of the pressure to the business while taking it off IT. It doesn’t mean Joe Director isn’t giving Jane Business Analyst a hard time because he can’t get what he wants. But, it does level-set the organization in a way that shows we’re all in this together.

The staffing situation also seems daunting. What’s the reality around available talent and the jobs CIOs need to fill?

Murphy: We’re having a hard time finding qualified applicants—particularly SAP resources, which is the bulk of what we’re hiring. On average, it takes three to four months to fill a technical SAP position. That’s way too long.

The conventional wisdom is that there are so many resources out there. But “relevant skills” is the operative phrase. When companies downsized, they weren’t downsizing their top performers. ... Hiring in 2011 will be very limited, and it will be limited to those critical positions you need to operate your organization. Therefore, the bar will be very high.

A lot of companies still see IT as a good place to look for high-cost, low-perceived value, just because of a lack of understanding of what IT does. And that’s a dangerous place to be.

Are there any bright spots? What’s going on inside the mind of the CIO right now?

Murphy: I’m probably one of the few CIOs with a bright spot. My company didn’t back off of this huge SAP investment. While anyone who’s done one knows it doesn’t necessarily equal a bright spot, at least it’s something new, and it’s giving me new opportunities. My leadership team has allowed me to build a new organization called Integrated Business Services, which is a conglomeration of business process and analytic resources, as well as traditional IT resources.

So, in that sense, I’m having the time of my life. But that’s highly, highly unusual right now in the marketplace.

There’s a perfect storm around us and ahead of us: continued outsourcing—or near-sourcing or rural-sourcing—with the chance to do more; financial pressures for the corporation; and the perception that IT is very, very expensive and low-value, or [that it’s] harder to monetize that value [than it is for other business areas]. Couple [these factors] with the youngest generation [entering the workplace], whose expectations of IT are very different. They don’t believe in IT as a function. It’s truly integrated into everything they think and everything they do—that really amps up the utility model to a significant degree.

As you get to know that generation and feel where this thing is going, you have to ask how relevant the role [of the CIO] will be in the future. We have to evolve the role of CIO. We’ve been accustomed to the need to change and adapt for the last 20 years. But we need to continue to integrate with the business, and to break the perception of IT as a separate entity that’s not part of the business. [We’re] just like marketing, sales, or the supply chain. I’m pressing hard to eliminate this notion of “us” and “them.” If we can integrate and be perceived as adding value to the operation of the organization, then our place will be secure.