The chief information officer of global tyre manufacturer
Pirelli has urged IT directors and CIOs to resist attempts by
their executive boards to dramatically reduce IT budgets as the
financial situation worsens.
In a presentation to CIOs at the Gartner Symposium
in Cannes, Dario Scagliotti says, "The world today is so different
than it was six weeks ago. There is greater concern on business
sustainability in the coming months. But I have no magic stick to
reduce operating costs by 15%, if the CEO asks. Pirelli operates in
a low-margin businesses, so cost efficiency is essential."
Instead, Scagliotti has rerouted his IT plans, looking at ways
to create value and trust between IT and the business. "IT is a
service to the business. It is crucial to create value
together."
With recession looming, he recommends that CIOs plan in advance.
"I have a plan B and a plan C budget. If the CEO sells 20% of
business, he would expect IT costs to be reduced by 20%." This is
only possible if IT is flexible and adaptable.
"My advice is to try to really understand the urgent imperative
for your business. I understand that business imperatives have no
correlation to a new version of software or a new technology. At
Pirelli I decided the way you manage IT is the same as any other
area of business."
He says, "Try to find the most important element - this tells
you exactly where your company wants to go. Understanding where the
company wants to go is crucial if IT is to add business value."
One of the ways he has tried to add value to the business is by
creating a working group to eliminate applications that were used
by only a few people in the company.
Another step was to make sure that IT staff understand the role
they play in the business. "Some 20-30% of what we were doing was
not useful. I believe at Pirelli IT we were guilty of not trusting
the business. We were in an ivory tower."
Scagliotti's warns IT directors to avoid relying on
key performance indicators and
service level agreements. Such measurements do not always
benefit the business directly.
"We were using SLAs and KPIs to protect ourselves," Scagliotti
says. That needed to change if he was to achieve his goal of
winning the trust of the business.
"Be aware of giving away too much information. Overselling IT
can create a reluctance for business users to talk to IT," he
warns.
Another potential pitfall is that IT staff are not particularly
flexible, even though they expect users to be. "I found the people
who were devising flexible adaptive systems needed improvements
themselves."
Has it worked? Scagliotti's believes he has achieved his
objectives. The president of Pirelli trusts IT to deliver the
information the company needs to make major decisions in a timely
fashion.
Furthermore, the CEO has been the top executive sponsor in a
major 18-month IT programme to consolidate systems around a single
SAP system, a single datacentre infrastructure and 15,000 standard
desktop PCs. As Scagliotti recalls, "It was the top item on his
agenda at meetings before anything else."