Next-Generation CIOs: Change Agents for the Global Virtual Workplace | COGNIZANT BUSINESS CONSULTING Month Year ARTICLE TITLE Be Global Preface COGNIZANT October 2010 Next-generation CIOs: change agents for the global virtual workplace is a Cognizant Business Consulting research report, written in cooperation with the Economist Intelligence Unit The Economist Intelligence Unit conducted the survey and analysis and wrote the report The report was based on a survey of senior executives in North America and Western Europe, in-depth interviews with nine senior executives and experts in the industry and other research The author was Jim Nash and the editors were Katherine Dorr Abreu and Debra D’Agostino The Economist Intelligence Unit would like to thank all those who contributed their time and insight to this project Contents Executive Summary Introduction Reorganizing Work: A New Hierarchy 10 A New Leadership Role for CIOs 11 Cultural Changes can Empower Teams, Ensure Security 13 The Elusive ROI 15 Conclusion 16 Appendix: Survey Results Executive Summary For several years, chief information officers (CIOs) have championed business efficiency Their focus has been largely on operational goals, such as keeping IT and operations running smoothly and reducing related costs, while enabling business processes to support their companies’ strategies for growth and profitability But the convergence of globalization, technologies that enable virtual work, collaborative methods and techniques, and a new tech-savvy generation (Millennials) of employees is changing how … collaborative virtual teams, business is conducted and structured across the organization (within teams, departments, when used effectively, combine etc.) and how the corporation interacts with diverse skills to quickly carry customers and partners out complex tasks and address novel market challenges This report examines the role of CIOs in restructuring how work is conducted throughout the organization It finds that companies leading the movement toward virtual and collaborative teams — often spurred by the CIO — are garnering results, particularly with respect to innovation, talent recruitment and retention, and productivity Key findings include: ● Some companies are changing their operations to support new structures based on virtual teams that not rely on traditional hierarchies and communication channels These teams can be powerful operational resources, particularly when it comes to knowledge-based work Unlike more traditional structures, these specialty teams reach across geographic, cultural and organizational barriers to find the needed resources While not appropriate for all types of operations, collaborative virtual teams, when used effectively, combine diverse skills to quickly carry out complex tasks and address novel market challenges They also have the potential to foster more productive relationships with internal and external partners October 2010 NEXT-GENERATION CIOs ● Organizations that have embraced virtual teams garner benefits such as increased innovation and competitiveness, but lack appropriate valuation methods to measure the quantitative impact of these structures on the bottom line Still, it is possible to quantify such things as delays resulting from redundant decision reviews prevalent in more conventional work structures It is also possible to measure time lost when clients or suppliers spot problems that would have been avoidable had these stakeholders been involved earlier in the project through virtual collaborative teams To gain support for their companies’ transition to the new approach, executives need to develop ways to measure return on investment ● CIOs are in a unique position to influence the adoption and effectiveness of virtual teams CIOs are familiar with the people, tools, technologies and techniques needed to create a corporate culture of virtual teams Particularly within knowledge-based enterprises, they know the processes and policies employed at all levels of the company and the tools that can support them And as members of the C-suite, CIOs are familiar with long-term strategic goals, which is essential in crafting an enduring new structure This perspective positions them as change agents COGNIZANT October 2010 Introduction A confluence of forces, some old, some new, is pushing companies to change how they work Globalization, powered by new communications tools, has broadened their reach Technologies such as cloud computing are allowing organizations to restructure operations At the same time, a new generation of technically savvy workers is working its way up the ranks, further exposing companies to transformative technologies like social media For some firms, particularly those that operate in many locations, new ways of organizing work that take advantage of knowledge sharing can be an effective response to these business shifts CIOs who combine technological expertise with a broad, strategic view of the business have an opportunity to lead their organizations’ adoption of new work approaches They bring technological clout to what is fundamentally a cultural transformation of the company They can so because they are CIOs who intimately involved in corporate strategy, which gives them a rare expertise top-to-bottom perspective Collaborative and virtual teams — more complex, dynamic and autonomous than traditional corporate team structures — can make it possible for companies to take advantage of human, physical and technological resources regardless of where they are located combine technological with a broad, strategic view of the business have an opportunity to lead their organization’s adoption of new work approaches A global survey of executives in Europe and North America, conducted by the Economist Intelligence Unit in May 2010 in cooperation with Cognizant Business Consulting, suggests that companies that are at the forefront of the transition stand out from their peers in many respects Companies that are already seeing the benefits of this transformation, defined as “leaders” in this report, say they outperform other organizations in innovation, recruitment and retention of talent, and productivity They tend to be less hierarchical, provide more flexible work arrangements, and have established policies and practices that support the Collaborative Virtual Work Structures: A New Way to Business Collaborative teamwork is certainly not a new thing in the business world, but how teams are used and how they function is changing In this report, the term incorporates a number of characteristics Interviewees often use the term “virtual teams” in describing them, although they involve more than mere physical dispersion In this new organization, teams break down rigid structures, creating environments in which people work in role-based, cross-departmental, cross-functional and international groups Knowledge sharing is fundamental to how these teams operate, and their success hinges on effectively using the expertise of each member Teams are by their nature flexible and open to change While there will always be standard operating procedures, and the need to show results will always be preeminent, teams must have a degree of self-management to be successful This autonomy means organizations can put more energy into innovation and less into bureaucracy As a result, less – but more relevant – communication is shared Executives who have played midwife to this change say it boosts productivity, reduces errors and helps retain high-quality talent at all levels When successfully deployed, these teams combine the strengths of small start-ups and of large, mature organizations: nimble, entrepreneurially minded teams are sheltered in the midst of big, stable companies They can spot and respond to market developments more rapidly than can conventional large organizations, and they are able to throw more resources at opportunities and errors than small outfits can These teams have elements of social networking Both involve self-organization and groups that are focused on shared interests, and both depend on frictionless, informal communications Custom-made analogues of Facebook, Wikipedia and Twitter, as well as high-definition, high-bandwidth telepresence systems, which allow people in different locations to feel as if they are in the same room, weave teams together October 2010 NEXT-GENERATION CIOs Leaders are more likely to have flat structures Chart How would you describe your organization’s structure and operations? For each pair, choose the one most applicable Leaders are those that are already reporting ROI from collaborative virtual teams (% respondents) Leaders All others Has a hierarchical organizational structure 51 71 Has a flat organizational structure 49 29 Source: Economist Intelligence Unit survey, May 2010 formation of more virtual and collaborative teams Throughout the report these leaders are compared with companies that expect to garner benefits from new work structures either within a year or more, or not at all Those firms are classified as “all others” in the charts throughout the report The research also shows, however, that there is no single model for such teams, nor a single best path to implement them How they are deployed reflects a company’s tolerance for decentralization, shared decision-making, collaborative innovation and change itself Some firms create teams at strategic points, straddling marketing and production or research and development and legal, for example Others integrate them deeply into the organization’s fabric While one might think that the digital generation – the Millennials – would be the main driver for this sort of change in companies, the research shows that they are not playing that role This may reflect the current economic environment, in which labor is abundant What matters more than age is mindset: Companies are adopting a variety of tools and collaborative methods because they increase competitiveness, not necessarily to attract or retain a specific employee demographic Nevertheless, organizations that are at the forefront of this transition may be better positioned to attract new workers when economic growth tightens labor markets To implement collaborative virtual teams, organizations must overcome several hurdles, including resistance to change and the risks born of greater openness Executives must be sure that the teams are well coordinated and not work at crosspurposes And although companies that have embraced these teams say they are integral to their organizations’ operations, they not have quantifiable measures of their impact Developing a set of metrics to prove the value of collaborative virtual teams is among the main challenges to their widespread adoption Executives who are able to quantify results will gain credibility to lead their companies’ transformation About the Survey A total of 402 respondents in Europe (52% of respondents) and North America (48%) participated in the survey, which was conducted by the Economist Intelligence Unit in May 2010 The panel is mainly senior: 45% of respondents hold C-suite or equivalent positions, and another 29% are senior vicepresidents, vice-presidents or directors Respondents represent a wide range of company size Thirtyeight percent are from small to medium-sized companies, with less than $500 million in annual revenues Another 19% represent companies with $500 million to $5 billion in revenues per year, and the remaining 33% come from companies with revenues of more than $5 billion Forty-six percent of respondents have IT functions The survey sought to explore differences in perspectives between these and non-IT functions, but found considerable alignment between the two groups Strategy and business development, and general management were the other main functional categories, with 13% in each The remaining 28% fulfill a range of functions Most of the organizations surveyed have global operations Respondents’ descriptions of their organizations appear in chart COGNIZANT October 2010 Chart Survey respondents represent global organizations How would you describe your organization’s structure and operations? For each pair, choose the one most applicable (% respondents) Operates globally 72 Operates only in its home country 28 Partners with companies in several countries 81 Partners only with companies in the country in which it is headquartered 19 Sells on the global market 75 Sells only in the market in which it is headquartered 25 Has a global supply chain 72 Has a domestic supply chain 28 Source: Economist Intelligence Unit survey, May 2010 Reorganizing Work: A New Hierarchy Survey results show that new ways of organizing work are gaining traction About one in six respondents says their organization already has seen positive results from more virtual and collaborative teams, and another one-fifth expects to garner benefits within a year Executives interviewed for this report are strong advocates of these work structures Leslie Jones, CIO of communications giant Motorola, for example, says collaborative virtual teams are part of the company’s DNA The practices are particularly appropriate for knowledge-based work Some companies have implemented them enterprise-wide, sometimes as a result of a major strategic decision In many cases, however, they are applied in an opportunistic way, and gain ground gradually within companies Other organizations are not adopting these work structures Those already benefiting from such practices — our “leaders” group in the survey — have some attributes in common not shared by the remaining respondents The former are more likely to see innovation and collaboration as important competencies for their organization They say their company is at the forefront in testing new collaboration and remote-work technologies And they report that the benefits of greater collaboration — including increased innovation, improved productivity and greater … the research competitiveness — outweigh the risks, such as suggests that reduced governance and potential security lapses (See chart on this page and chart on page 9.) collaborative virtual teams are more likely to take hold where the CIO is engaged in the process and involved in broader strategic concerns Companies in which top executives demonstrate strong support for the transition to a new work structure are more likely to outperform their peers in such areas as innovation and productivity, the survey shows The CIO in particular is seen as a potentially galvanizing force: The research suggests that collaborative virtual teams are more likely to take hold where the CIO is engaged in the process and involved in broader strategic concerns Perhaps because they have been deeply engaged in the transformation of their organizations, interviewees report positive results after adopting the new structure Indeed, for U.S.-based consumer products giant Procter & Gamble (P&G), which considers virtual teams a strategic strength, the structure minimizes delays between discovery, decision and action CIO and president of global business services Filippo Passerini says building such teams is more than a way to delegate tasks: It pushes decisionmaking authority from middle managers toward groups of project or topic experts working together, eliminating bureaucratic delays Early adopters of these work structures tend to have flatter organizations and less “siloed” communication channels than more traditional companies, the survey shows They typically offer a wider range of collaboration and remote-access tools, including telepresence, instant messaging, site templates, external or custom social networking environments and cloud computing (See chart 4.) These characteristics support virtual teams, says Chris Satchell, chief technology officer (CTO) at U.S.-based International Game Technology (IGT), a global developer of electronic gambling systems (In an unusual setup, the CIO of IGT reports to Mr Satchell, who thus combines responsibility for technology innovation and IT.) Leaders value innovation, talent and productivity more highly, and say their organizations outperform their peers Chart How important are the following attributes to your organization, and how does it compare with its peers? Rate on a scale from to where 1=extremely important or significantly outperform; 3=average; 5=not at all important or significantly underperform Leaders are those that are already reporting ROI from collaborative virtual teams Leaders All others % respondents who said the attribute was “extremely important” Innovation 68 45 23 Recruitment of high-quality talent 68 38 30 Retention of high-quality talent 59 41 18 Productivity 56 45 11 % respondents who say their organizations “significantly outperform” their peers Innovation 35 19 16 Recruitment of high-quality talent 23 11 12 Retention of high-quality talent 19 11 Productivity 22 14 Source: Economist Intelligence Unit survey, May 2010 October 2010 NEXT-GENERATION CIOs Most companies provide support for virtual teams, but leaders offer more, and more advanced, choices Chart In what ways does your organization support a virtual work environment? Select all that apply Leaders are those that are already reporting ROI from collaborative virtual teams (% respondents) Leaders All others Cloud computing 46 18 External social networking access 44 17 Presence awareness (Online indication that person is available to communicate) Providing remote access to e-mail 91 73 Providing employees with mobile equipment (mobile phones, laptops, etc.) 91 75 Instant messaging capabilities 65 49 Video conferencing 71 56 Providing remote access to corporate network and servers 84 70 Corporate portal or intranet 75 61 COGNIZANT October 2010 Such a team might comprise a factory manager, data engineer, marketer, project manager and company attorney, all of whom have expertise in the project at hand Most or all of them can be in separate locations Working together, they address practical issues, eliminate redundancies and catch mistakes more efficiently than within conventional structures When they span the globe, these teams can effectively work on a project around the clock In some cases, the benefits might not be initially obvious Collaboration is intrinsic to the hospitality industry, for example, but it tends to be site-specific Jeremy Ward, CIO of global luxury hotelier Kempinski AG, says that the company instituted a culture of geographically diverse virtual teams two years ago “We changed the way we work,” he says 55 30 Internal/custom networking applications 54 32 Source: Economist Intelligence Unit survey, May 2010 Because communications generally are not filtered or relayed through managers, information can spread more easily Ideas can be added to, dismissed or simply absorbed by the group for future use There are few data-hoarders, and isolated “gurus” are integrated in teams where they share their specialized knowledge The Munich-based company, which develops and manages hotels, often in exotic corners of the globe, learned that employees benefit from a robust, shared cache of experiences and greater autonomy Operating a hotel in Mongolia is different from running one in Namibia, but there are similarities in providing luxury in remote locations, including sourcing materials or training staff in a developing economy Once the advantages of knowledge sharing were identified, and the case for a new corporate culture made, the company implemented tools needed to make it possible Kempinski’s global virtual teams now use wikis to collect, share and elicit knowledge about tasks, practices and projects Virtual shared workspaces enable real-time, globally dispersed collaboration And process-automation tools streamline corporate tasks including training and personnel matters like vacation requests Interviews with other executives reveal that Kempinski’s culture-before-technology approach is a common best practice among companies that have adopted collaborative virtual teams Making the transition to this work structure poses challenges for traditionally organized companies, however The CIO can provide the support needed to implement the necessary changes How to Deploy Collaborative Virtual Teams A united C-suite showed everyone the benefits of virtual teams Among them are: “If a global perspective isn’t everywhere in the company, you’re holding yourself back,” says Chris Satchell, chief technology officer of U.S.-based International Game Technology (IGT) For IGT, which has $2.1 billion in annual sales and facilities on every continent but Antarctica, that perspective involves more than knowing overseas sales projections ● Faster time to market: Everyone needed for a project is involved from the beginning, which minimizes time spent on briefings at critical decision points ● Less bureaucratic autonomous IGT is turning to global virtual teams in an effort to remain the world’s biggest maker of casino-based and online gambling systems Mr Satchell was hired in June 2009 by new CEO Patti Hart to help end the company’s financial stagnation Ms Hart had already begun efforts to dismantle what Mr Satchell says was an outmoded command-andcontrol structure interference: Teams are semi- ● More innovation: If done right, virtual teams concentrate needed expertise in each group Relationships are important when building virtual teams “We’re always pushing employees to understand that people in other groups have different perspectives They have something you need, and you have something they can use,” says Mr Satchell While IGT is still the dominant player in the market, the global recession has cut its revenue and profit, and slashed its share price Seeing an opening, competitors are hungry to overtake the 25-year-old firm As head of product and information technology, it is Mr Satchell’s job to make sure IGT is not out-innovated To that end, he is deploying virtual teams throughout the organization Even as virtual teams become more entrenched at IGT, travel remains an important relationship-building tool “It’s a misconception to think that you can away with your travel budget,” Mr Satchell says Even high-frequency virtual meetings need to be supported with occasional face-to-face gatherings (though not necessarily involving whole teams) Before repeating the practice in the whole company, Mr Satchell debuted the concept in IT “I wanted to make sure I had my own house in order.” He started with some smallscale efforts and made sure IT could support the larger move without a hitch that could derail company-wide deployment Today, Mr Satchell says, “we’re getting the pace and focus that we need.” He thinks he is two years away from completing IGT’s transition to mature virtual teams Chart All organizations face the same challenges, but leaders are more confident in their abilities What are the greatest challenges posed by a more virtual work environment? Select all that apply Leaders are those that are already reporting ROI from collaborative virtual teams (% respondents) Leaders All others Difficulty in managing diverse tools needed to enable dispersed teams to work together effectively 26 41 Risks to governance and control 42 54 Data leakage 44 55 Erosion of corporate culture 23 30 Decreased efficiency 13 Loss of productivity 25 Source: Economist Intelligence Unit survey, May 2010 October 2010 NEXT-GENERATION CIOs A New Leadership Role for CIOs In just a few years, most CIOs and their IT departments have grown from asset managers to strategic enablers, ensuring that IT capabilities are aligned with business needs The next step for CIOs is to become drivers of broad strategic change If they not, they risk losing clout in their organization “How much competitive advantage can there be to running a different network layout or buying a different server?” asks P&G’s Mr Passerini Motorola’s Ms Jones agrees Gone are the days when CIOs could prove their strategic value by assembling technology platforms that support business processes “The minute the CIO talks about ‘alignment’ (of IT with business processes), you’ve declared yourself as something alien” to the revenue-generating portion of the organization, she says “We have to be integral to the strategy, not just aligned.” Leaders test and adopt technologies that enable virtual teams Chart Which statement best describes your organization’s approach to adopting technologies that enable collaboration and remote work? Leaders are those that are already reporting ROI from collaborative virtual teams Leaders All others (% respondents) Is at the forefront in testing and adopting new technologies 52 15 Only adopts technologies after their effectiveness has been proved in the market 44 60 Only supports basic technologies such as email and conferencing capabilities 23 Don’t know/Not applicable Source: Economist Intelligence Unit survey, May 2010 CIO and CEO should lead implementation of virtual teaming Chart In your opinion, who within the organization should lead the effort to implement the structures and tools necessary for a more virtual work environment? Select up to two Leaders are those that are already reporting ROI from collaborative virtual teams (% respondents) Leaders All others An ad-hoc committee involving CIO, COO, others 16 23 Chief operations officer (COO) 22 24 Chief executive officer (CEO) 45 48 Chief information officer (CIO) or equivalent 49 44 Source: Economist Intelligence Unit survey, May 2010 10 COGNIZANT October 2010 It is not enough, even, to support a top-down initiative that uses collaborative virtual team tools, because the tools are not the critical component What matters, says Ms Jones, is the organization’s ability to perform well in complex markets through a flexible and adaptive structure that is supported by IT CIOs interviewed for this report agree that such an approach is crucial To make it work, tools, processes and policies that support collaborative virtual teams have to be spread throughout the organization Can CIOs sell such an idea to the company? They have in the past: At the start of the PC revolution, finance staff began taking their personal computers to the office so they could their job without having to petition for time on the mainframe Successful CIOs understood what was happening, advocated for policy changes and adapted systems to capitalize on decentralization This new change is much bigger in scope, and will require that CIOs tackle cultural issues that have strategic impact Survey results suggest they have the support to so: The CIO is broadly viewed by respondents as a champion for collaborative environments, and also is considered the appropriate executive to implement the structures and tools needed to make collaborative virtual teams happen Only CEOs ranked higher overall (chosen by 47% of all respondents), which is not surprising as they are ultimately responsible for determining corporate strategy What is unexpected, though, is how high CIOs ranked: They were chosen by 45% of all respondents (Respondents could choose up to two of nine functions or groups.) CIOs ranked even higher among companies defined as leaders in the survey: For those firms, the CIO outstripped the CEO 49% to 45% (See chart 7.) CIOs looking for an ally when promoting virtual teams should turn to chief marketing officers (CMOs), suggests Clay Shirky, who teaches the Interactive Telecommunications program at New York University and has written extensively about communications trends Traditionally the most outward-focused executive, the CMO has much to gain from greater collaboration with buyers and would-be buyers, and can be a powerful ally in creating collaborative virtual teams It is axiomatic that the best marketing campaigns are conversations Leading such a change could create greater opportunities for CIOs in the long term, suggests P&G’s Mr Passerini: “The CIO role is beautifully undefined This is a unique opportunity to play a more active role in the business.” Tackling cultural change is one way to expand the CIO’s presence in the organization Holiday Inn’s Image Improves as Teams Overhaul Brand Intercontinental Hotel Group (IHG), the world’s largest hotelier as ranked by number of rooms, has implemented knowledge sharing by bringing team members together in a dedicated room for the duration of the project – whether three months or one year Tom Conophy, executive vice-president and CIO, is using these teams to achieve a company goal: making IHG’s technology a key brand differentiator IHG currently manages 1,100 live IT-related projects around the world The potential for duplicate work is enormous, so key projects use Yammer, a private social networking tool for teams Like many companies deploying collaborative virtual teams, IHG also supports wikis to document projects and share information The teams combine IT employees with anyone else in the company who can help complete the project “Business people sit next to engineers and have real-time interaction,” says Bill Peer, vice president of enterprise architecture and strategy at IHG Teams have the authority they need to make decisions that will bring the project in on time and on budget People can volunteer their services for a team or they can be chosen by management The approach is popular, despite the various light-hearted nicknames the dedicated space has gotten: the gulag, the war room, the cave “I’ve never had anyone say ‘no’ to a second assignment,” says Mr Peer Mr Conophy says the teams complete tasks faster than if they had to go through traditional channels to communicate with stakeholders and get decisions from executives He adds that the teams generate more innovation because the principle parties are always together to share and assess ideas The approach was used as part of IHG’s yearlong, $1 billion brand overhaul of Holiday Inn, spotlighted by Brandweek.com’s weekly Buzz Report, which measures brand awareness among consumers The January 2010 report concluded that Holiday Inn’s overall consumer-perception score rose throughout 2009, despite an extremely challenging economic environment It was only one of two top-10 hotel chains to manage that feat; the overall industry’s score declined over the same period A solid strategy for revamping the brand resulted in this success But teams helped the company achieve its goals, according to Mr Conophy Ms Jones of Motorola and Mr Satchell of IGT say their CEOs were predisposed toward more collaborative corporate environments, but that is far from universal Conventional hierarchies are familiar to and protective of chief executives To embrace collaborative virtual teams means addressing attitudes about more open knowledge sharing and cooperation If implemented with the proper coordination to ensure that company goals are met, collaborative virtual teams can provide significant benefits, helping organizations anticipate or respond to novel situations, and thus become more competitive Still, gaining support to deploy such teams more broadly throughout the organization will require proving their value Productivity gains, number of innovations, talent retention and a host of other metrics can be useful tools to evaluate unorthodox techniques in rapidly changing environments However challenging it is to develop metrics to show the benefits of such team structures, CIOs who so will be better able to sell and then defend the new ways of organizing work 14 COGNIZANT October 2010 Conclusion For most companies, dealing with uncertainty and change is a part of doing business Today, however, the challenge is harsher Globalization has moved beyond the search for resources and markets to securing and optimizing the use of talent and skill sets wherever they are found It depends on collaboration, which now occurs across departments, using communication tools to connect people regardless of their location Rapid technological change puts pressure on companies to constantly adapt Organizations that are able to knit their operations into flexible and semiautonomous teams that outperform competitors in innovation and responsiveness to market changes will have an advantage This will require changes to processes, especially with regard to knowledge-based work CIOs are strategically positioned for this task because they operate at the intersection of strategic decision-making and tactical practicality They see how employees work, and are aware of new technologies that can help employees excel at their jobs And they can take that knowledge to the C-suite, making the case for a structure based on collaborative virtual teams and supported by tools that will penetrate deeply into the business world Companies that have not implemented such changes can learn from the experience of those identified as leaders in this report While the use of collaborative virtual teams is still evolving, some best practices have emerged: ● The change toward virtual collaborative teams should not be viewed simply as a technology effort but as a strategic business initiative Many of the companies identified as leaders in this research have relied upon partnerships with business heads to champion this approach For others, the transformation can start within IT, where CIOs can hone a strategy customized for the overall organization But this should be a launch pad that will enable the CIO to identify the best techniques and tools for the enterprise ● To be effective change agents, CIOs must be not only leaders, but also enablers and partners Success is far more likely if CIOs and IT professionals are seen as integral team players whose efforts add real value to the deployment of collaborative team structures within the organization CIOs can provide the visible corporate leadership and support that is required as traditional hierarchies are challenged and dismantled They should promote training and robust communication policies that keep enterprise-wide goals and security in sight, yet not stifle collaboration and creativity ● CIOs should spearhead the development of metrics that prove the tangible value of collaborative virtual teams While survey respondents report improvements, especially with regard to innovation and productivity, proving value is key to securing enterprise-wide support for a shift to this new approach Metrics strengthen the CIO’s position as an agent of change October 2010 NEXT-GENERATION CIOs 15 Appendix: Survey Results Percentages may not add to 100% due to rounding or the ability of respondents to choose multiple responses How would you describe your organization’s structure and operations? For each pair, choose the one most applicable (% respondents) 16 COGNIZANT October 2010 72 Operates globally 28 Operates only in its home country 81 Partners with companies in several countries 19 Partners only with companies in the country in which it is headquartered 75 Sells on the global market 25 Sells only in the market in which it is headquartered 72 Has a global supply chain 28 Has a domestic supply chain 50 Has a limited portfolio of products/services 50 Has a highly diversified product/services portfolio 68 Has a hierarchical organizational structure 32 Has a flat organizational structure Appendix How important are the following attributes to your organization? Rate on a scale from to where 1=extremely important; 3=average; 5=not at all important (% respondents) Extremely important Average Not at all important Innovation 49 31 14 16 Recruitment of high-quality talent 43 36 Retention of high-quality talent 44 31 19 Productivity 47 36 13 In your opinion, how well does your organization compare with its peers with respect to the following attributes? Rate on a scale of to where 1=much stronger; 3=about the same; 5=much weaker (% respondents) Much stronger About the same Much weaker Innovation 22 35 32 92 Recruitment of high-quality talent 13 26 43 14 41 15 Retention of high-quality talent 12 28 Productivity 15 34 42 In your opinion, how well does your organization compare with its peers with respect to the following attributes? Rate on a scale of to where 1=much stronger; 3=about the same; 5=much weaker (% respondents) Agree Neither agree nor disagree Disagree My organization is moving toward a virtual work environment, in which human, physical and technological resources are located where they contribute most effectively to attaining business objectives 54 27 19 My organization needs to change business processes to work more effectively with external stakeholders 56 35 10 In the next 12 months my organization will take steps to improve collaboration among dispersed teams 61 29 11 Our CIO (or head of IT) is an evangelist for a more collaborative environment within the company and with partners 43 40 17 My organization needs to adopt a more flexible work environment to attract talented employees 50 33 17 My organization has policies and practices that facilitate the formation of cross-functional and dispersed teams 45 36 19 In the next three years, the physical dispersion of our workforce will make it essential to improve our capabilities for working virtually 53 37 10 Collaboration’s positive effect on productivity and competitiveness are outweighed by the risks it entails 44 36 19 October 2010 NEXT-GENERATION CIOs 17 Appendix Which of the following statements you think best describe changes that will occur in your organization over the next three years? Select up to three (% respondents) Cross-functional teams will become more important within the organization 45 My organization will use more collaboration technologies 41 My organization will structure its operations based on the most efficient use of skill sets and resources, independent of geography 35 My organization will outsource more functions 26 My organization’s teams will be increasingly dispersed geographically 25 My organization’s employees will increasingly work remotely 22 My organization’s external partners will be increasingly dispersed geographically 21 Younger workers entering the organization will exert pressure for a more collaborative and flexible work environment 20 My organization will offer more flexible work arrangements (such as telecommuting, flexible hours, etc.) 18 Other The organization will remain essentially the same as it is today Don’t know/Not applicable What is your organization’s strategy with regard to creating a virtual work environment? Choose the option that best applies (% respondents) Has been an early adopter 28 Is beginning to implement a broad initiative 18 Is beginning a limited trial 20 Is analyzing the need and opportunity 16 Has halted or abandoned efforts Has neither a strategy nor plans to create one 13 Don’t know/Not applicable 18 COGNIZANT October 2010 Appendix In what ways does your organization support a virtual work environment? Select all that apply (% respondents) Providing employees with mobile equipment (mobile phones, laptops, etc.) 78 Providing remote access to e-mail 76 Providing remote access to corporate network and servers 72 Corporate portal or intranet 63 Video conferencing 59 Instant messaging capabilities 52 Internal/custom networking applications 35 Presence awareness (Online indication that person is available to communicate) 34 Cloud computing 23 External social networking access 22 Other My company is not supporting a virtual work environment Don’t know Which statement best describes your organization’s strategy with regard to collaboration? Select only one (% respondents) It is a core competency of my organization 18 It is an enterprise-wide effort, driven by top leadership 28 It occurs within departments, and depends on the initiative of department heads 23 It occurs only when necessary 15 It is focused mainly on working with external stakeholders (e.g., suppliers or partners) It does not have a specific strategy with regard to collaboration Don’t know/Not applicable October 2010 NEXT-GENERATION CIOs 19 Appendix In your opinion, what are the three most important benefits your organization can gain from a more collaborative and virtual work environment? Select up to three (% respondents) Better productivity 51 Increased efficiency 50 Environment more conducive to innovation and new ideas 31 Faster response to market events 28 Lower infrastructure costs through methods such as virtualization and cloud computing 24 Stronger customer relationships 18 Increased transparency 14 Attraction of a more diverse work force 13 Lower personnel costs by off-shoring 11 Minimizing employee turnover 10 Improved risk awareness and management 10 Recruitment of younger employees Better brand awareness among customers Other Don’t know/Not applicable Which statement best describes your organization’s approach to adopting technologies that enable collaboration and remote work? Select only one (% respondents) Is at the forefront in testing and adopting new technologies such as data sharing applications and social media 21 Only adopts technologies after their effectiveness has been proved in the market 57 Only supports basic technologies such as email and conferencing capabilities 20 Don’t know/Not applicable 20 COGNIZANT October 2010 Appendix What are the biggest obstacles to creating a more virtual work environment in your organization? Select up to three (% respondents) Cultural resistance to changing traditional work methods 45 Concern that data security would have to be weakened in order to make collaboration possible 26 Cost of implementing collaboration technologies 25 Lack of an effective strategy to support a virtual work environment 24 Lack of interest at the executive level 18 Existing rules and tools that are designed to prevent data leakage 16 A rigid hierarchical structure with walls between departments 14 Belief that it will require more bureaucracy, monitoring and policing 12 Our infrastructure is not sufficiently robust to support collaboration 12 Lack of interest at the department level 11 Perception that it will lead to a loss of intellectual property 11 Excessive competition among our departments Other Don’t know/Not applicable To what extent Millennial employees—those aged 18 through 35—influence your organization’s culture? (% respondents) Very large influence 13 Some influence 61 No influence 23 Don’t know/Not applicable October 2010 NEXT-GENERATION CIOs 21 Appendix In comparison to more established workers, what areas you think are most important for Millennial employees? Select up to two (% respondents) Opportunities for faster professional growth 41 Flexible work environment 34 Being heard in the organization’s decision making process 23 Adoption of new communications techniques such as social media 19 Mentoring 16 A more non-traditional, decentralized operating structure 14 Opportunities for relocation Focus on corporate social responsibility Other Don’t know/Not applicable How much influence does the CIO (or head of IT) have in defining your organization’s strategy? Please rate on a scale from to 5, where 1= strong influence and 5=no influence (% respondents) Strong influence No influence Don’t know 22 15 13 10 Enterprise strategy globally 21 26 Enterprise strategy regionally 19 27 28 13 Line-of-business strategy 14 26 27 16 13 IT strategy 53 22 COGNIZANT October 2010 28 22 Appendix In your opinion, who within the organization should lead the effort to implement the structures and tools necessary for a more virtual work environment? Select up to two (% respondents) Chief executive officer (CEO) This is an organization-wide challenge 47 Chief information officer (CIO) or equivalent This is primarily a technology-enabled task 45 Chief operations officer (COO) This is primarily an operations task 23 Chief security officer (CSO) This is a security matter Specially created C-level position Collaboration involves almost all departments and hierarchical levels, so a specific position exists in my organization to implement it An ad-hoc committee involving CIO, COO, department heads and/or others 21 Department/unit heads They know best how to accomplish the changes 11 An outside consultant This helps overcome internal politics and resistance Other Don’t know/Not applicable How supportive is your IT team of allowing employees to work virtually? (% respondents) 45 Very supportive 47 Somewhat supportive Not at all supportive Don’t know/Not applicable What is the relationship between IT and line-of-business executives in your organization when it comes to changing technology? Select the one that best applies (% respondents) IT works closely with line-of-business executives to identify needs and choose 41 appropriate technologies IT consults with line-of-business executives to 30 identify needs but determines which tools to implement Changes in technology are imposed on the 14 lines of business by IT Decisions regarding IT are made by the line-of-business executives and implemented 12 by IT Don’t know/Not applicable October 2010 NEXT-GENERATION CIOs 23 Appendix What Millennials (employees aged 18 through 35) entering your organization request from IT? Select up to three (% respondents) Support for mobile computing 38 Unfettered access to the Internet 35 Less bureaucracy in product development and in communicating ideas 26 Collaboration and networking apps 26 Access to new social media and collaboration tools 25 Easier access to internal data 25 Telecommuting support 25 Freedom to choose platform 15 Video capabilities that enable face-to-face communication between people in dispersed locations 11 Other Don’t know/Not applicable 11 Which statement best describes how the role of your organization’s IT function would be affected by a more virtual work environment? Select only one (% respondents) IT would have a larger policing role in balancing data security and collaboration/transparency 33 IT would be more closely integrated into departments It would become a partner in decisions at all levels 22 IT would have greater strategic responsibilities, including managing the social dimension of information 20 No change IT already supports a virtual work environment 18 Other Don’t know/Not Applicable When will changes brought on by greater collaboration and a more virtual work environment result in a measurable return on investment? Select only one (% respondents) My organization is already garnering measurable results 17 year 18 to years 38 More than years 11 Never Don’t know/Not applicable 12 24 COGNIZANT October 2010 Appendix What are the greatest challenges posed by a more virtual work environment? Select all that apply (% respondents) Data leakage 53 Risks to governance and control 52 Difficulty in managing diverse tools needed to enable dispersed teams to work together effectively 38 Erosion of corporate culture 29 Barriers to communication among dispersed teams 26 Loss of productivity 21 Decreased efficiency 12 Other Don’t know/Not applicable In which country are you personally located? (% respondents) United States of America 42 United Kingdom 12 Canada, Germany France, Russia, Spain, Switzerland Italy, Belgium, Czech Republic Poland, Denmark, Sweden, Austria, Finland, Hungary, Netherlands, Norway, Estonia, Ireland, Romania In which region are you personally based? (% respondents) 52 Europe 48 North America October 2010 NEXT-GENERATION CIOs 25 Appendix What is your primary industry? (% respondents) Financial services 23 IT and technology 15 Professional services 10 Healthcare, pharmaceuticals and biotechnology Manufacturing Consumer goods Energy and natural resources; Government/Public sector Construction and real estate Entertainment, media and publishing; Telecoms; Transportation, travel and tourism; Education; Retailing; Automotive Agriculture and agribusiness; Chemicals; Logistics and distribution What are your organization's global annual revenues in US dollars? (% respondents) Less than $500 million 38 $500 million — $1 billion 12 $1 billion — $10 billion 17 $5 billion — $10 billion $10 billion or more 26 26 COGNIZANT October 2010 Appendix Which of the following best describes your title? (% respondents) Board member CEO/President/Managing director 14 CFO/Treasurer/Comptroller CIO/Technology director 19 Other C-level executive SVP/VP/Director 29 Head of business unit Head of department Manager 12 Other What is your main functional role? (% respondents) IT 46 Strategy and business development 13 General management 13 Finance Marketing and sales Risk Customer service Supply-chain management Operations and production R&D Legal Other October 2010 NEXT-GENERATION CIOs 27 World Headquarters 500 Frank W Burr Blvd Teaneck, NJ 07666 USA Phone: +1 201 801 0233 Fax: +1 201 801 0243 Toll Free: +1 888 937 3277 inquiry@cognizant.com European Headquarters Haymarket House 28-29 Haymarket London SW1Y 4SP UK Phone: +44 (0) 20 7321 4888 Fax: +44 (0) 20 7321 4890 infouk@cognizant.com India Operations Headquarters #5/535, Old Mahabalipuram Road Okkiyam Pettai, Thoraipakkam Chennai, 600 096 India Phone: +91 (0) 44 4209 6000 Fax: +91 (0) 44 4209 6060 inquiryindia@cognizant.com © Copyright 2010, Cognizant All rights reserved No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant The information contained herein is subject to change without notice All other trademarks mentioned herein are the property of their respective owners [...]... champion this approach For others, the transformation can start within IT, where CIOs can hone a strategy customized for the overall organization But this should be a launch pad that will enable the CIO to identify the best techniques and tools for the enterprise ● To be effective change agents, CIOs must be not only leaders, but also enablers and partners Success is far more likely if CIOs and IT professionals... of interest at the executive level Lack of an effective strategy to support a virtual work environment Source: Economist Intelligence Unit survey, May 2010 October 2010 NEXT- GENERATION CIOs 11 Collaborative Virtual Teams Evolve at CERN Some of the world’s largest collaborative virtual teams work at CERN, the European Organization for Nuclear Research, straddling the French-Swiss border The research groups,... teams 45 36 19 In the next three years, the physical dispersion of our workforce will make it essential to improve our capabilities for working virtually 53 37 10 Collaboration’s positive effect on productivity and competitiveness are outweighed by the risks it entails 44 36 19 October 2010 NEXT- GENERATION CIOs 17 Appendix Which of the following statements do you think best describe changes that will... time and on budget People can volunteer their services for a team or they can be chosen by management The approach is popular, despite the various light-hearted nicknames the dedicated space has gotten: the gulag, the war room, the cave “I’ve never had anyone say ‘no’ to a second assignment,” says Mr Peer Mr Conophy says the teams complete tasks faster than if they had to go through traditional channels... positioned for this task because they operate at the intersection of strategic decision-making and tactical practicality They see how employees work, and are aware of new technologies that can help employees excel at their jobs And they can take that knowledge to the C-suite, making the case for a structure based on collaborative virtual teams and supported by tools that will penetrate deeply into the business... a collection of virtual teams Atlas is closely linked with other similarly large collaborations, and communication and knowledge sharing between them are intense CERN has strict rules about what information can be published or openly discussed, and individual institutions can have their own disclosure protocols Yet despite the number of people, the complexity of the tasks and the informal nature of... to virtual teams, although similar to his colleagues, he is reluctant to assign all of the success to it October 2010 NEXT- GENERATION CIOs 13 Holiday Inn’s Image Improves as Teams Overhaul Brand Intercontinental Hotel Group (IHG), the world’s largest hotelier as ranked by number of rooms, has implemented knowledge sharing by bringing team members together in a dedicated room for the duration of the. .. should spearhead the development of metrics that prove the tangible value of collaborative virtual teams While survey respondents report improvements, especially with regard to innovation and productivity, proving value is key to securing enterprise-wide support for a shift to this new approach Metrics strengthen the CIO’s position as an agent of change October 2010 NEXT- GENERATION CIOs 15 Appendix:...Cultural Changes can Empower Teams, Ensure Security Collaborative virtual teams can alter how work is done They create benefits, but also risks and challenges They require organizations to evolve, reshaping teams and developing processes to meet the needs of the task at hand And they require executives to coordinate the teams so that the overall goals of the organization are met Security... Meinhard says virtual teams keep confusion to a minimum Unlike many endeavors in which scientific knowledge is compartmentalized, CERN scientists network extensively and manage their own virtual teams locally This reduces the burden of information overload, says Mr Meinhard For the most part, people get only email relevant to them Team wikis are common and collaboration software is available for groups ...Be Global Preface COGNIZANT October 2010 Next- generation CIOs: change agents for the global virtual workplace is a Cognizant Business Consulting research report, written in cooperation with the. .. legal, for example Others integrate them deeply into the organization’s fabric While one might think that the digital generation – the Millennials – would be the main driver for this sort of change. .. organization Can CIOs sell such an idea to the company? They have in the past: At the start of the PC revolution, finance staff began taking their personal computers to the office so they could their job