Microsoft CIO Tony Scott on IT Strategy in 2009

Maybe it’s not that bad out there for CIOs.

With budgets under the CFO’s microscope, projects in jeopardy and the role of the CIO itself in question, IT leaders are certainly feeling some pain. But fear not, says Microsoft CIO Tony Scott.

His contrarian message: CIOs, burdened for years with tight budgets and forced to improve productivity in their shops and across their companies, may be better suited to handle the recession than their C-suite colleagues.

But for CIOs to truly succeed in 2009, they will need sharp business skills, a laser focus on innovation and customer needs, and a comprehensive strategic mind-set.

Scott himself may be better suited for the CIO role than many of his peers, given his experience as an IT and business leader with Disney, General Motors and Bristol-Myers Squibb. He met with CIO Insight Editor in Chief Brian P. Watson during a recent trip to New York. What follows is an edited, condensed version of their conversation.

CIO Insight: A lot of CIOs didn’t really seem nervous when we started asking them about the downturn.

Tony Scott: They’re saying, “So? What’s new about that?”

Why is that?

Scott: Many CIOs are probably better positioned than most of their colleagues in business to understand how to manage in this environment. Most CIOs have been dealing with flat or declining budgets for at least seven or eight years, and have learned how to get more productivity, and to expand the capability and functionality of what they have with the same or fewer dollars.

That’s a discipline that takes awhile to develop. It’s a way of thinking about how you approach a problem. Most CIOs have had at least some experience with this, given the trends in the industry.

The downturn extends the need for even more of that kind of thinking. Most CIOs will find the same kinds of opportunities I find at Microsoft.

They may have had shadow IT organizations that now, in the face of a tougher economic climate, say, “Hmm–should I really be doing this stuff, or can our IT guys do a better job of this?” I think we can, in most cases.

I think we also have a unique opportunity: We have a chance to rebuild some infrastructure at a much lower cost than we would have a few years ago. In IT, you see waves of investment. The good news about waves of investment is the same as the bad news: Eventually, the investment needs to be replaced.

Many companies are at a point where a wave of investment in the 2001 to 2003 time frame is now reaching the end of life, and the scale, simplicity and even the cost are a fraction of what it cost when it was first put in. That’s a huge opportunity where we can take cost out and deliver better functionality.

CIOs say the downturn presents a good opportunity to re-evaluate their strategy. Do you feel the same way?

Scott: Historically we’ve done a good job of that. There weren’t a lot of sharp left or right turns in our strategy. What we have seen in this climate is more creative thinking about how things could be done, and changes to some of our underlying business processes that were happening anyway but now get accelerated in the face of a challenging environment. Initiatives to take cost out suddenly became a lot more interesting. Or maybe you had a little less enthusiasm around it, whereas this environment shows people that we need to get moving.

All organizations of any scale realize that this is a time to take market share. No matter what business you’re in, the strong survive–those who can do a good job, be there for customers and provide the kind of support they’re expecting. If customers know you’re there for the long haul, there’s a different type of conversation that takes place.

Inside the company, the same thing holds true. That’s why any of the shadow IT stuff that may have been attractive before isn’t so attractive anymore. People will turn to the organization they expect will be there for the long haul, delivering the benefits that they expect. For most CIOs, that’s a big opportunity.

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