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Going global - biggest challenge for CIOs

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Frank B. Modruson, CIO, Accenture, oversees all business applications and technology infrastructure, enabling over 146,000 employees in 49 countries worldwide to work anytime, anywhere

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Modruson is known to have transformed IT into a strategic asset for Accenture. Under his leadership, Accenture has produced an unparalleled ability to run IT as a business, implemented a comprehensive governance model, streamlined the technology infrastructure.

He formerly served as a client partner in Accenture’s Communications & High Tech and Products groups, delivering large, complex IT transformation projects and business solutions that maximized RoI.

In an exclusive interview with Sudesh Prasad, Modruson talks about how IT has helped in the transformation of Accenture. He also shared his thoughts on the changing role and challenges faced by today’s CIOs.

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You have been known as someone who has worked on IT transformation at Accenture? How did you achieve this?

We came out of a global partnership called Anderson Consulting and it evolved out of Arthur Anderson and Anderson Worldwide. Anderson Worldwide is a global partnership and business function of IT, which was actually shared between the two. When we finally separated in 1989 but the IT was shared until 1999. When we shared, we split operationally duplicating the technology. We cloned the technology, we duplicated it and we separated. We reworked the strategy and wanted to have technology which can give access of IT to everybody at Accenture from anywhere anytime. We adopted Internet as our network strategy. We wanted to run IT as a business and wanted to adopt some technology platforms and standardize on them. In 2000-2001, we decided to do a reality check and plan for future. It was then that we embarked on a transformation program to change IT.

Our partnership heritage was very distributed, locally based IT that was run by country. We decided to be a public corporation. We wanted to be a centrally managed standardized technology that is same to the entire world. We then embarked on transformation to change IT to conform to that which involved lot of centralization. For example, we had E-mail spread across the world in 40 locations hosted locally. We moved it into a global E-mail system which was hosted in four locations around the world. We moved our financials on SAP, one instance of SAP to the entire world. Financials, HR, business warehouse, sales—all in one instance of SAP. This is the philosophy which we apply across the business which allows us to transform and standardize our overall technology.

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If you think of many companies, they want to have one of everything. But because of this transformation, we got rid of one of everything. We have one technology platform from Microsoft for our servers and desktops and data centers. We use SAP as standard ERP platform. We have pushed this to an extreme which has really made our IT very clean—very easy to change and adapt to the business. IT is nothing more than a servant to the business. It is the lifeblood of the business and it needs to support the business to make it what business wants to do.

Accenture has been an aggressive user of outsourcing. How do you manage to do that?

We view IT as a small business inside Accenture supporting the business. To help the business understand IT, we package IT as a set of products and services that we offer to the business. Each of those products has definition of what is in the product and the cost of different service levels.

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With sourcing, the real key decision you have to make is about market efficient scale. If you are big enough, at some point, the cost per unit comes down. But at times, you are doing more of the same, more volume, you become market efficient scale. The crucial point is here is –are we cost efficient. For example, we outsource our conference calls as we felt that we needed somebody who is more market efficient. Outsourcing is a tool that makes your operations more efficient. It is in the best interest of the business to do that and it drives down the overhead cost of the business.

When we looked at our IT strategy in 2000, we looked at Accenture’s go to the market strategy and made sure that we were aligned with it. So, if we had a capability that we offer to the client, we can be using the same capability ourselves. So, one of the key things that we did when we looked at sourcing, things around global delivery network, the applications management or around infrastructure, we used the global delivery network (GDN) and Accenture Technology Infrastructure Services (ATNS) and our primary operations provider for applications and infrastructure. Accenture’s CIO Group is primarily responsible among other things for planning, customer relationship management, planning IT strategy.

How does a CIO keep pace with the fast changing technology landscape?

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In reality, technology is changing quickly, but the CIO’s responsibility is to understand the needs of the business and then translate that need into how you meet them. For me new technology is not that interesting unless it solves our business problems. We need to understand the business problem first and then understand the technology. What is important is to decide where one can apply new technology to the business. CIOs need to be literate but need not be updated on every single technology. One of the key challenges for IT is to keep up to the business. Business keeps changing. We at Accenture keep up with the changing times. My role is to understand my company’s needs and demands are and make sure we are meeting them in timely fashion.

You also advise Fortune 500 CIOs. Which is the top of the mind issues before the CIOs?

I enjoy sharing each other’s experience whenever I get to meet them. There are talk around how to align IT with their business. Other topics include IT governance, security, data retention strategies, consolidation of systems, and how do you invest in them. Our philosophy is to be very aggressive on the investment side and expect return on the operation side. What we have done during that transformation period is that we have kept our investment budget constant, flat, but the operations budget going down. Some CIOs have decent investment budget like that we have, sometimes they don’t and they fall in what we call “austerity trap”. We think that high performance IT organizations invest in future to stay current and help the business move forward

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Technologies that CIOs cannot ignore

What are your views on Windows Vista?

We are heavy users of Microsoft products. The key thing for a CIO is to set expectation with the business and the user community and make a decision. CIOs should have a point of views on any new product that is available in the market place.

You have been credited with transforming your global ERP? Can you provide details about that?

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We had implemented a single instance SAP for finance. We converted all our finance in 2004 and followed that with big bang HR conversion in July 2005 and brought the sales component in June 2006. Each one of those was big time conversion projects. We converted the whole company on those capabilities at that time. There were business reasons why that were the most efficient way not the most recommended way to do business. This allowed us to retire 450 financial applications. We had similar retirements on the similar applications. There were lots of duplicate systems that were consolidated. What this allowed us to do was to have one system. Having one financial system with all of the data in one place. A lot of global companies have instances of one financial systems, sometimes multiple instance of the same product so when they start consolidating, they end up with the multiple versions of the applications and several issues crops. We don't have those issues.

Which are some of the technologies that CIOs should keep track of?

There is lot of them. Single sign on is an interesting technology we are looking at. As we have multiple and broad based system, you sign in and you stayed signed in for the rest of the applications. That is something lot of users gets frustrated with. Solving that is an attractive proposition. Then the whole Vista rollout (Windows Vista and Office 2007, and Sharepoint 2007) would be interesting and CIOs need to have an understanding and point of view on those. Virtualization is an interesting area and we have been doing that. Network technologies like MPLS, VoIP are interesting technologies that drive down operational cost. Database and decision support technologies are some of the other ones.

What are your views on SOA?

SOA is going to be a key enabler for a lot of companies. SOA is taking good development practices for encapsulation of business function. We are going to move more and more applications to SOA. We are already having some applications on SOA already. There has been hype in the market around SOA but the reality is that it will happen over time depending on the specific business needs of the enterprise.

Do you have any message for Indian CIOs?

A: It is exciting times in India as it is growing and has a vibrant economy. Main challenge for CIOs would be how to globalize and start connecting with the rest of the world. As companies become more global, being a CIO of that single country company is actually easier than being a global CIO of a global company. It is challenging due to issues such as regulatory requirements, understanding the culture and connect with business leaders.

What are your views on CIOs relationship with CEOs?

The relationship between the CIO and the senior leadership of the company is very important. I report to my COO who runs the operations for Accenture. Historically all the CIOs in the older generation company generally do not report to CEO but probably to the CFO. I think the most progressive companies' CIOs report to the COO or the CEO. If you look at the history of IT, 1980s were about data processing, 1990s were about infrastructure, 2000 and beyond is about enabling the whole business. The role of CIOs did not exist in the 1980s.

At Accenture, we have a IT steering committee which is the governing body. It is composed of the COOs of all our operating entities. So we are aligned to the business to make sure that IT is serving the business.

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