Day Three

By Dean Lane  |  Posted 04-13-2006

Global IT: The Russians Are Coming, The Russians Are Coming

Last fall, I was invited to be a keynote speaker at the Adam Smith Institute's "Corporate IT Strategies in Russia" summit, which was held at the Le Meridien Moscow Country Club, from February 28 through March 2, 2006. In the months before I flew to Moscow, I spent some time learning about my audience.

I began to consider the mindset of the Russian business community, and how their daily practices might differ from those to which I've become accustomed. I wondered, Do businesspeople in Russia address business issues in the same way as Americans do? What means or processes do they employ to resolve issues, innovate and move initiatives forward? Is the Russian business community behind the U.S. conceptually, or are they aware of the latest advances in technology, techniques and tools? What interests them beyond the business world?

I landed in Moscow and was met by a driver who delivered me to Le Meridien Moscow Country Club, deep in a forest of birch trees many miles from the city center. I arrived in my room just after 11:00 p.m., only to find that the hotel's wireless network was limited to . . . the lobby.

SMTP was blocked, making Web mail the only option, and at $25 for one day of access, it wasn't exactly a bargain. My other option was dial-up in the room—but where would I dial, and how much would it cost? Frustrated, it seemed to me that technology hadn't quite made its way to Le Meridien. But over the next few days, I would learn otherwise.

Day One

The conference started out like any other: registration, introductions, opening comments. But unlike other conferences I've attended, I had a clear mission for the next three days: to meet and understand my audience. One thing was quite apparent right away—the Russians have a thorough understanding of the past and present states of information technology in their business community, and a clear vision for where they are headed.

Our attention was grabbed by two teaser topics covered in the afternoon; the managing directors of both Gartner and Elashkin Research gave a sneak preview of what would be discussed in more detail on the final day of the conference:

  • IT organizational scenario: a consideration of past, present and future trends within Russian IT organizations. I was interested in the fact that more and more CIOs in Russia are reporting to the chief operating officer, or president. And while finance and CFOs are still heavily influential, the landscape is changing. We even learned of several CIOs sitting on boards of directors.
  • IT outsourcing scenario: an in-depth dialogue about outsourcing IT to national versus international service providers. Because a number of Russian service providers do exist, it was suggested that the same items that are currently outsourced might be brought back in-house in the future.

    Next page: Russian Take on CIO's Concerns

    Russian Take on CIO

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    Day Two

    At the beginning of the second day, I was energized, wondering what would be revealed to me in the day's sessions, and a touch nervous about delivering my own speech: "The CIO's Mission Is to Be CEO of the IT Department." Several of the Russian CIOs were eating a European-style breakfast, so I brought my plate to the table and tried out my subject on them.

    They liked the concept and were enthusiastic about all the variations on the theme that could be used.

    The first session, "A View From the Top: Defining the Role of IT and the Leading CIO," consisted of five presentations, and featured executives from H-P, BearingPoint, JSC TVEL (nuclear energy), MTS (telecom) and the CEO of Vneshtorgbank.

    Each presentation explored the CIO's role as a business leader, as part of the executive team, and as a member of the Board:

  • IT in the West: Recognition that the information technology function has evolved with increasing speed over the past 40-some years, and is finally viewed as a partner to other business functions within an organization.
  • Progress in Russia: Over the last five years, Russian IT executives have taken forward steps by understanding IT's 40-year history, and by reading progressive Western books such as The Role of the CIO and CIO Wisdom.
  • New CIOs: Highlighted the fact that new CIOs must understand technology first, before they can begin to be groomed in business acumen.

    I used the break to interact with several conference participants. They were astute, and eager to learn as much as possible. Everywhere, inquisitive businesspeople were looking to their peers for insight they could take back to their companies. Most interactions occurred in Russian, so I can't tell you exactly what was discussed. I can, however, tell you that information technologists in Russia are open, eager, informed and not at all arrogant.

    Our second session, "The IT Landscape in the Next Five Years," featured the general manager of Aeroflot Russian Airlines, the commercial director of RusTelecom, the general manager of RT Communications, the CIO of CROC (IT systems), the CIO of Ford Russia, and the vice president of IT for Mondi Business Paper Syktyvkar.

    This session considered the evolution of IT over the next five years, and explored:

  • Architecture and infrastructure: Both, it was agreed, are necessary ingredients for continued progress to occur. The current status, emerging trends and possible directions in Russian infrastructure and architecture were considered. The Russians seemed to face some of the same issues as U.S. CIOs—cost justification of infrastructure projects, introduction of new technology and maintenance of the legacy systems, etc.

    The one notable difference was the number of enterprise-architecture changes and integrations due to mergers and acquisitions. The Russians did have to deal with this, but to a lesser degree than did the non-Russians.

  • Integrated technology environments: Creation and implementation of technology must involve internal customers and stakeholders so that business initiatives are blended with technological capability. The session highlighted the importance of business partners acting as co-owners and coworkers on any IT project.
  • Client satisfaction must dominate the landscape, while allowing room for creativity and innovation. Russian firms believe that controlled innovation will assist them in maintaining a competitive edge. Improving processes internal to the company and shared with their customers and suppliers is important to them. Just as important is ensuring that the functional business unit is an equal partner in such projects, and the Russians believe that the functional business unit should lead that project.
  • Governance is another important issue for the Russians, but they seem to fall short in the areas of transparency and compliance with standards. The issue of transparency comes down to communication, and to the independence and interdependence of middle managers. The standards are available, but often multiple standards (sometimes conflicting) are found in a single firm. The Russian executives have work to do in both of these areas.

    The final session of the day addressed how to spend strategically while undertaking goals similar to those discussed earlier in the day. The presenters were the managing director of IBS (IT services), the CIO of Akonit (pharmaceutical holdings), the CIO of Eurochem, and the general manager of JSC LenPoligraphMash (printing machinery).

    What I thought was going to be just another discussion on "staying within budget" and "meeting the schedule" developed into a serious exploration of "Best Practices of the Strategic Spender." This session provided lessons of a practical nature:

  • What does it mean to be a strategic planner, and how much should be invested in information technology? The form of planning the speakers described was one of overlapping fiscal years and strategic projects. Although they never used the phrase "portfolio management," they did discuss it, but with a strong emphasis on longer range, comprehensive, planning of the portfolio.

    The contrast between the Russians and the U.S. in this area is pronounced. U.S. firms are paring down requirements so that they are in 90-day "implementable" chunks. This is touted as part of the longer term, strategic plan, but the business and the requirements may change prior to implementing the whole system. The Russians, on the other hand, are planning multiquarter, and in some cases multiyear, projects. This method, too, can result in changes in the business and processes before a system is implemented.

  • What methods work best when implementing strategic IT investments? While elements of this issue were linked to the planning presentation above, it also dealt with the nuts and bolts of project implementation under budgetary constraints. All in all, the Russians feel the same pressures, budgetary constraints and concern over user acceptance as do U.S. firms.
  • The final theme was of particular interest because it moved beyond a discussion of return on investment for measuring the value of projects. Both quantitative and qualitative methods of evaluating the efficiency of technology investments were discussed. This went a step beyond measuring the efficiency of a project and looked at the underlying technology investment.

    So, if a new technology is purchased for a particular project, some of the investment part of the equation may be shared with other (planned) activities or applications because the underlying technology is pervasive to several applications. Although this spreading of the cost over multiple projects allows the Russians to show a greater return per project, the true benefit, in my mind, is the recognition of the value of infrastructure.

    Day Two filled my mind with what I thought were plenty of insightful and meaty topics. I was ready to relax, network a little and have a shot of vodka. To my surprise, the Russians were just getting warmed up. Into the evening they had four workshops, or special-interest groups. The speakers for each of these groups were equally impressive and included chairmen, CIOs and other C-level personnel. The workshops addressed explored the following verticals:

  • Metallurgy and Automotive
  • Food & Beverage and Retail
  • Banking and Finance
  • Public or Government Agencies

    As the evening wore on, the formal sessions ended and the informal, vodka-enhanced discussions ensued. In some instances it was more difficult to understand the conversation, as my interpreter had retired for the evening, but I easily understood the passion aroused by such topics as employee retention and how to address a lack of capacity if management says "do more with less."

    Next page: Day Three: What Problem Should a "Solution" Solve?

    Day Three

    : What Problem Should a "Solution" Solve?">

    Day Three

    I woke up early in the morning to pack my bags. Why is it that you always bring home more than you start out with? Airy flakes of snow had begun to build a wall against my windowpane. I didn't give it much thought, as I wasn't flying out until 7:50 p.m.

    The first session, called "How to Ensure Information Technology Delivers" included a managing director at Deloitte & Touche, the CIO of Petersburg Fuel Company, and the CIO of Saturn Automotive.

    Most of the time during this session was spent discussing:

  • First, whether information solutions should simply resolve an issue or a problem, or simultaneously focus on shareholder value. There was some lively discussion as to whether providing a solution is also focusing on shareholder value, but in the end it was agreed that providing solutions to the correct set of issues, and with the correct prioritization, would deliver the greatest possible shareholder value.

    The bottom line was agreement by all that if you do not ask the right questions, there is no way to provide the right answers. Therefore, a well-defined and valuable project would provide shareholder value as a result of undertaking the project.

  • The other topic covered during this session was the fundamental non-price competitive advantage. This discussion was somewhat tethered to return on investment, and was mostly about focusing on the R in ROI. So, for example, if the executive team decides that an initiative is so important that it must be completed, the focus will be on the return, rather than the investment. Similarly, a project that is undertaken because of a regulatory requirement may also bring a competitive advantage.

    In this case, the cost will be monitored, but not of primary concern. Other questions pondered here included: When should ROI be defined and measured? And who should have the responsibility of performing the ROI measurements?

    Right after lunch I stopped by my room. The wall of snow on my windowsill was now somewhere between six and nine inches high. I began to wonder if the snow would continue, and if I would be able to fly out that evening.

    The second session of the day was a panel discussion called "Adopting Best and Innovative Practices." The panelists included a senior consultant at Deloitte & Touche, the CIO of THK-BP (oil company), a managing director at OTIS EE Group, the CIO of Alfa Bank, a general manager at Rosgosstrakh (insurance), and the CIO of Sheremetyevo International Airport.

    The main themes and examples discussed were:

  • Teaming up with functional business units to uncover innovative ideas and functionality that could be implemented for the benefit of the business. Importantly, there was agreement that there are no "first steps" solely for IT, or for the business unit. The team approach, beginning with brainstorming, was emphasized. Another point that was emphasized was the continued involvement of the business unit throughout the implementation of the initiative.
  • The discussion progressed into an assertion that adopting best practices was no different than implementing any change, and that it should be governed by the existing change-management program or process.

    It was recognized that best practices create improvements; however, they can still represent a change to the organization. The importance of having a standard change-management process was restated.

    I rushed back to my room so that I could finish packing and prepare for what would turn out to be a two-hour interview with Russia's iOne magazine. This magazine is the equivalent of a BusinessWeek, with sections on business, finance, information technology, human resources, sales, etc. The windowsill snow meter had risen significantly, and I began to question whether my airplane would be allowed to fly out. The Russians assured me that this was "normal" weather and that there would not be an issue with taking off.

    The drive to the airport was about an hour and 45 minutes. As I sat on the airplane I reflected on this three-day conference: It was clear that the U.S. information-technology community is respected by the Russians for their position and contributions.

    Early in my career, I remember that IT groups would hire business-unit personnel into the IT department, the logic being that it was

    easier to teach people how to code than it was to teach them marketing, manufacturing or other disciplines.

    Many in the U.S. still operate under this belief because we see companies change out their CIOs and simply have CFOs and other execs "take a turn" at being CIO. Within a short period of time, a real CIO invariably must be engaged—and usually has a mess to clean up.

    The Russians told me that at the coder/programmer level this was absolutely the case. However, the Russian C-level executive understands and appreciates the increasing complexity of infrastructure, applications and technology as one ascends the IT career ladder.

    Overall, the conference was time well spent. The Russian IT community is a professional group, serious about their careers, their direction, and their results. The conference sessions went into the night and the after-hours, informal sessions went into the wee hours of the morning. The speakers were well prepared on their topics, and the conference format was to hold questions until the end of the speaker's presentation.

    The interest and participation by the group were noticeable, and there was not a single session where there was enough time to answer all of the audience's questions.

    A few specific takeaways for me at this conference were:

  • Planning: The planning horizon used by the Russians is further out than that used by U.S. firms. Their dedication to this process and the replanning interval was noteworthy. Therefore, the amount of time spent on planning seemed to be greater than in the U.S.
  • Value Add: In everything that was discussed and described, the Russians posed the underlying question of shareholder value and return on investment. Even to the point of violent agreement that completion of a successful project and achieving value for shareholders was synonymous.

  • Spirit: The Russians have a can-do attitude and are not discouraged by their current situation. They are a determined and motivated group.

    It is easy to see that the Russian IT-business community will be competition for us in the years to come.

    And yes, my plane took off on time.